SUMMARY

ALGERIA: HOW PIVOTAL IS IT? AND WHY?

by

William B. Quandt

University of Virginia

August 1997

Algeria presents several faces to the world: one is of a country deeply scarred by an ongoing civil war; another is of a modernizing regime emerging from a deep crisis, rebuilding its political and economic institutions, and returning to a path of growth and prosperity. Somewhere in between seems to lie reality. Algeria is seriously troubled by internal violence and a lack of political legitimacy on the part of its government. But the country has been making something of an economic recovery; an Islamist takeover is unlikely; and much of the country is at peace, although not the capital and surrounding areas. Parliamentary elections held in June 1997 did not end Algeria’s political crisis, but did result in one of the few multi-party legislative bodies in the Arab world.

Algeria’s crisis is essentially political, but it also has roots in disruptive economic developments of the 1980s and the disastrous educational and social policies of the post-independence period that failed to prepare the new generation for gainful employment. Since 1992, when legislative elections were suspended by a military that was reluctant to cede power to Islamists, some 60,000 Algerians have died in the internecine violence that has pitted the regime against extremist Islamist groups. Most of the population seems unwilling to take sides in this bloody struggle, although large numbers did vote in the November 1995 presidential election that gave a mandate to General Liamine Zeroual.

Just as it is difficult to foresee the path that Algeria may take in coming years, is it also difficult to make a clear judgment on whether or not Algeria should be considered a pivotal state. Compared to other candidates, it is small in population and the United States only has a modest presence in the country. But Algeria does count as a significant source of energy (oil and gas); Europe is deeply concerned about its future; and neighboring countries in North Africa and further afield in the Middle East could be affected by what happens there. Thus, it seems fair to consider Algeria as at least a marginal member of the pivotal group.

American interests in Algeria are largely derivative from broader interests in Europe or the Middle East, and Washington has only a modest relationship with Algeria at present. Still, America’s voice is heard in Algiers, and some influence can be exerted, at least at the margins. The present situation is sufficiently worrisome that Washington would do well to join forces with European allies to try to persuade Algeria to pursue economic and political reforms with a greater degree of commitment. Some form of "positive conditionality" on various forms of aid might help persuade moderates in Algeria to move toward a political settlement of the crisis. If that were to happen, American interests would be well served. A stable, democratizing Algeria would contribute to stability throughout the Arab world.

 

 

ALGERIA: HOW PIVOTAL IS IT? AND WHY?

by

WILLIAM B. QUANDT

University of Virginia

August 1997

(Final Draft)

 

On the rare day that Algeria is featured in the American press, it is usually in conjunction with some particularly atrocious act of violence in the long-running conflict between the country’s military-dominated regime and its radical Islamist opponents. Algiers sounds increasingly like Beirut in the 1980s, with car bombs and assassinations becoming a part of everyday life. In the past four years, more than 60,000 Algerians have died in this internecine struggle, an average of nearly 300 each week. Hardly a family has been spared. And this in a country that paid an inordinately high price in blood and treasure to win its independence from France just thirty-five years ago.

But as with Lebanon during its much more destructive civil war, reports of the demise of Algeria as a functioning society or state are premature. In fact, in large parts of the country life goes on quite normally; the economy registered a modest upturn in 1996; oil companies are scrambling to invest in what seem to be promising new areas; a major gas project has just been completed, linking Algeria closely to Europe for years to come; and there is even a surprising vitality to Algerian political and intellectual life, reflected in one of the freest presses in the Arab world. Several political parties, including moderate Islamists, compete for support, albeit under tight controls from the government.

So, which image is more compelling -- that of Algeria on the verge of civil war, or an Algeria on a path toward recovery, merely struggling with what the regime calls "residual terrorism"? Neither picture is quite satisfactory, and any honest assessment will have to admit that the situation in Algeria as of 1997 is extremely complex, surprisingly fluid, and could significantly improve or deteriorate in the next few years. In short, choices remain to be made, by the regime, by its opponents, by ordinary Algerians who have tended to stand on the sidelines, and by foreign creditors and partners. Out of this mix of contingent choices will come a future Algeria that could well play a significant part in the North African and Middle Eastern region -- a country deserving to be considered pivotal in the positive sense -- or quite possibly a country that fails to achieve its potential, remains deeply troubled by violence and corruption, and whose problems infect the surrounding region to one degree or another.

ALGERIA’S PRESENT CRISIS

To gain some perspective on Algeria’s uncertain present, we need a quick look at the recent past. From its independence in 1962 until the early 1980s, Algeria was ruled by a series of authoritarian regimes, in which the military, the single party and the bureaucracy were the key players. Populism and nationalism, coupled with a degree of romantic "Third Worldism", provided the ideological matrix of politics. Oil and gas revenues allowed some significant modernization. Education, health care and cheap housing were provided in return for political passivity on the part of the people in whose name the regime governed. The system did not work very well; there were all the expected problems that accompany this model of development; but life did improve for the bulk of the rapidly growing population. By the early 1980s, however, the ruling party was widely seen as corrupt and unresponsive to popular needs, and pressures for change were mounting. Some gradual liberalization of the economy began, which tended to benefit those with connections to the regime, thus deepening the alienation of those on the margins of society -- the young, unemployed, recent migrants from the rural areas who found themselves without much hope and without much education in crowded suburbs around Algiers and other large cities.

When international oil prices collapsed in the mid-1980s, Algeria was one of the countries that was hardest hit. Never one of the big oil exporters, Algiers had gambled on continued high prices through the 1980s to finance the construction of light and heavy industries. Enormous sums were spent on expensive factories that produced goods for which there was little obvious demand. Algeria went heavily into debt, but the managers assumed that rising oil prices would make it easy to repay the debts when they came due. But that was not to be. Instead, oil revenues plummeted, just as heavy demands for repayment hit in the late 1980s. The government of the day had to do something to make ends meet. Removing part of the social safety net might save money, but risked a social explosion.

And that is precisely what happened in October 1988. Throughout the country there were demonstrations demanding the removal of the government. Who organized them, and even what caused them, is still debated -- but the regime was threatened, for the first time since independence, by massive protests. The army was called in, hundreds of civilians were killed, and Algerians were stunned that violence of this sort had erupted after nearly twenty-five years of relative security and domestic stability.

The regime responded, remarkably, by adopting a policy of rapid political and economic liberalization. Within months, freedom of the press and of association had been secured with a new constitution, and Algerian political life changed dramatically. Dozens of associations were formed; a whole range of publications appeared; and one new mass movement emerged to speak for the marginalized and dispossessed. The new movement was called the Islamic Salvation Front, or FIS (using its French acronym). Islam had always been a part of the Algerian national identity, but until now there had not been a strong Islamist party. But political liberalization in these circumstances produced a dominant opposition whose liberal credentials were highly suspect.

In 1990 the FIS won municipal elections with an impressive four million plus votes (out of a total eligible electorate of nearly thirteen million). The FIS immediately demanded presidential elections, and was offered instead parliamentary ones in 1991. After a great deal of maneuvering within the regime and within the FIS, those elections were held in late 1991 and once again the FIS was headed toward victory -- albeit with one million fewer votes than the previous year. The military, however, stepped in and canceled the second round of balloting, outlawed the party, arrested its leaders, and declared a state of emergency. A transitional period of several years began during which Algeria was ruled essentially by the military.

Somewhat surprisingly, the regime that canceled the elections did not try to return to a totally authoritarian model. The period of democratic experimentation from 1988-1991 left some residues, especially in the form of a relatively free press and acceptance of the idea of a plurality of political parties. In short, the old populist one-party model could not be revived; but, at the same time, democracy seemed too risky, as if it might open the floodgates to Islamist opponents of the regime.

Insofar as the regime had a coherent strategy, it seemed to consist of trying to restore "law and order", then revive the economy, then reestablish a measure of legitimacy through a controlled series of political reforms. Efforts were made -- with what degree of sincerity is hard to say -- to find an accommodation between the regime and the jailed leaders of the FIS. But by mid-1995 these efforts were abandoned, with the regime charging that the FIS would not condemn the use of violence, and the FIS claiming that the regime itself was relying on violence to stay in power. From this point on, the imprisoned FIS leadership was placed in solitary confinement and the FIS as an organized movement began to fall apart. It was replaced on one extreme by the much more militant Armed Islamic Group (GIA) and on the moderate wing by Hamas, an Islamist movement that was willing to renounce violence and work on building grass-roots support through welfare and educational work. Meanwhile, the death toll continued to rise.

By 1995, it was becoming clear that the Islamist opposition would not be able to overthrow the regime. Algeria was not destined to follow the path of Iran. At the same time, the radical Islamist opposition was not about to lay down its arms and surrender. Equally striking was the seeming indifference to both the appeals of the regime and its Islamist critics on the part of most Algerians. There were few demonstrations of support for one side or the other in this deadly quarrel.

In November 1995, elections were held for president. Unusual in the Arab world, a number of candidates were allowed to run, but the victory of General Liamine Zeroual was a foregone conclusion. Still, a very large number of Algerians did actually turn out to vote -- the official returns said 75%, of whom 61% voted for Zeroual. Even if the figures were inflated and the elections far from fully democratic, it seemed clear that many Algerians had cast their votes for Zeroual in the hope that he would use his new legitimacy to find a way out of the crisis.

Since the election, there has been a great deal of political activity in Algeria, but it has not had the effect of ending the crisis. Indeed, much of it has seemed formulaic -- endless consultations, proposals, debates -- but the regime all the while has proceeded with a plan to strengthen the institution of the presidency, while making it difficult for any of the parties to mount an effective challenge.

The first step toward rebuilding a strong presidency after the election was to oust the reformist leadership of the old nationalist party, the FLN, and to try to reconstitute it as the president’s party. After 1992, it had joined the ranks of the legal opposition parties and had called for legalizing the FIS. But in mid-1996, the Central Committee met and returned an old-guard loyalist, forcing the reformers to the sidelines. Then the regime proposed a platform for national discussion, the centerpiece of which was a revision of the constitution and new parliamentary elections. Consultations, dialogue, and a national congress all took place, but essentially the regime’s project was hardly affected. In November 1996, a referendum was held on new constitutional provisions. In essence, the new constitution would give the president more power; would create a second chamber of parliament, one third of whose members would be appointed by the president; and a new electoral law would prevent parties from basing themselves on religion, region or language. The regime claimed that the vote was overwhelming in favor of the proposed changes, but many doubted the accuracy of the official figures, and election monitors had not been allowed to check the polls. Nearly all the parties had opposed the referendum and had urged abstention or a negative vote.

With the referendum behind it, and a constitution that ensured a strong presidency, the regime pressed ahead to carry out parliamentary elections in June 1997, to be followed by municipal elections in October 1997. Since the FLN remained divided and unpopular, the regime encouraged a new party, the Democratic National Rally (RND), to represent the regime’s views. What genuine support it had was in the trade union. While many were skeptical that the parliamentary elections would be honest, most of the parties agreed to participate. Some thought the regime might well permit free elections, since it had already assured itself that real power would remain in its hands.

Meanwhile, the GIA seemed determined to show that the regime’s claims that the armed opposition has been defeated were false. During the early part of 1997, the GIA carried out a series of atrocious attacks, the only point of which seemed to be to show that it could still strike terror in downtown Algiers and in surrounding villages. There was no longer a political agenda that accompanied the terror, and the other Islamist groups, including the remnants of the FIS, were quick to denounce such senseless killing. The regime, while hardly popular, seemed to hope that the excesses of the GIA would work to its advantage (which led some conspiracy-minded Algerians to believe that the regime was actually behind some of the GIA atrocities).

When parliamentary elections were held in June 1997, the results did not create a particularly clear picture. About two-thirds of eligible votes actually showed up at the polls, more than in 1991 but less than in 1995. The pro-government party, the RND, won about 40% of the seats with about 34% of the vote. Two Islamists parties managed to win 27% of the seats with 24% of the vote. The government was assured a comfortable, but not overwhelming majority, and a three-party coalition government was formed that included ministers from one Islamist party.

Many accused the government of manipulating the results of the elections, and no doubt there were some abuses. International observers under United Nations auspices were unwilling to declare the elections "free and fair", but in private they were willing to say that the margin for manipulation was unlikely to have been more than 5-10%. In any event, the point of the elections was to create an institution where Algerians could resolve conflicts peacefully, and it would take time to see whether that might eventually be an outcome of the series of elections in recent years.

How might Algeria emerge from its current turmoil? While the regime has little credibility, and modest political skills at best, one cannot dismiss entirely the possibility that it will forge ahead with its preferred scenario and may enjoy partial success. In this version, elections will continue to be held (relatively freely, with substantial participation), thereby showing that the Algerian people are allowed a voice in governing themselves and have turned their backs on the extremists; the economy may pick up in the next several years; the GIA may be marginalized and other Islamists coopted. In this optimistic scenario, Algeria might begin to resemble Turkey (a semi-democratic regime with the military as the ultimate guardian of order and legitimacy); or one of the formerly dictatorial regimes of Latin America (Chile, Peru, Argentina) that eventually made a transition to democracy. What seems missing in the Algerian case is a cadre of committed leaders who see the need for change and have the credentials to convince the public that they are heading in that direction.

The alternative, more pessimistic vision for Algeria sees an isolated military dictatorship squandering the resources of the country, cut off from popular support, running a "predatory" state based on the collection of oil and gas rents. Civil society will weaken, as the small middle class chooses to emigrate, and the large number of young, alienated youths will continue to provide recruits for the most extreme Islamists. A prolonged period of domestic turmoil might ensue -- some have imagined a wealthier version of Afghanistan or Somalia, with endless clan and tribal warfare. Central America may provide other depressing models of prolonged civil strife -- Guatemala, El Salvador and Nicaragua come to mind.

Between these two scenarios one can find a picture of an Algeria in which the main political forces of the country -- the military, the trade union, the legal political parties, and the less extreme among the Islamists -- reach a political understanding on a new political pact. The military would be acknowledged as the ultimate arbiter of the system (as in Turkey), but would withdraw from day-to-day management of the country; a centrist coalition of democrats, secularists, and moderate Islamists would be given the chance to govern; economic reforms would continue, permitting the emergence of new, independent social actors; and eventually the violence would end through fatigue and political accommodation. This is doubtless the most desirable of the three scenarios for the small group of committed democrats in Algeria, and the one that holds the brightest promise for the future. We will discuss further on whether outsiders can do much to increase its chances of being realized.

IS ALGERIA PIVOTAL?

At first glance, Algeria is a somewhat surprising choice to include in a discussion of pivotal states. Of the nine countries thus designated by Chase, Hill and Kennedy, Algeria is the smallest in population and Gross Domestic Product It ranks seventh in exports, fourth or fifth in per capita income, and third in size of territory.

In more precise terms, Algeria has a population of about 30 million, a GDP of around $36 billion; a GNP per capita of around $1500 ($3480 in Purchasing Power Parity -- PPP --dollars); annual exports of about $10 billion; and a land mass of more than 900,000 square miles. It borders on Morocco, Mauritania, Mali, Niger, Libya and Tunisia and is an important source of energy for Europe. It produces about 1.2 million barrels per day of oil and lease condensates (of total world consumption of about 63.7 million b.p.d.) and has the potential for modest increases in coming years. Its gas reserves are enormous -- the fifth largest in the world -- and it has just opened a pipeline across the Strait of Gibraltar that can carry 9.5 billion cubic meters per year of gas to Spain. Eventually, that amount may be doubled. Algeria also has a small 15 megawatt heavy water nuclear reactor, ostensibly for research purposes.

If Algeria is indeed to be considered a pivotal state, it is not because of any one of these factors taken in isolation. There are other countries in the developing world that are larger in population (Bangladesh), export more oil (e.g., Libya, Nigeria, Venezuela and Iran), and seem to be more reliable partners of the Western democracies (Chile, Argentina). But Algeria does occupy an important geostrategic space, and that, taken together with its resources, probably does place it in contention for being considered a pivotal state. Its proximity to Europe, as well as its position as a major Arab state, mean that what happens in Algeria will have repercussions beyond its borders.

We must be careful, however, not to exaggerate Algeria’s influence. There was a time, of course, when Algeria symbolized a certain kind of revolutionary third-world nationalism. It led the call for a new and more equitable international economic order, promoting the interests of the South against the North. But those days are gone, and Algeria is no longer looked to as a positive model of development or leadership, either in Africa or the Arab world. Instead, Algeria is more often mentioned as an example of the dangers of precipitous democratization. (The Egyptian and Tunisian regimes are among those that make this point to justify their own harsh approach to Islamic movements.) While Algeria may no longer serve as a model to others, events in Algeria could still have regional consequences, both negative and positive.

In North Africa and the Middle East, events in Algeria are followed closely. By and large, the regimes in power are hoping that the government will win out in its struggle with the Islamists. By contrast, Islamist groups are cheering on their ideological brethren. If the Islamists were to come to power, there would be some effect well beyond Algeria’s borders. After all, the Islamist wave seems to be receding -- some have spoken of the "failure of political Islam" -- and a victory in a significant Arab country like Algeria would give Islamists everywhere a sense of renewed possibilities. Similarly, if the regime manages to marginalize the Islamist radicals and coopt the moderates, that will also be seen as a significant development. But there is no mechanistic domino effect at work here. If Algeria, for example, were to succumb to the Islamists, that does not mean that Tunisia and Morocco would follow suit. Indeed, they might adopt even stricter policies toward their own opposition movements, and begin to provide help to dissident Algerians as well. Somewhat surprisingly, Libya might also oppose an Islamist regime in Algeria.

The European perspective on developments in Algeria is of importance, since one reason for concern with the situation in Algeria is its potential to affect conditions in France in particular. Already several million Muslims live in France, most originating from North Africa. The French have become very sensitive to the prospect of additional waves of illegal immigrants crossing the Mediterranean to join family members already in Europe and to find jobs. With the openness of borders within Europe, it may become quite difficult to prevent substantial illegal immigration. And if the Algerian conflict spills over into France, it can bring with it episodes of violence and terrorism.

In the worst of circumstances, a future Algeria might turn some of its oil wealth to the development of weapons which could conceivably threaten Europe. For the moment, there is not much concern with Algeria’s military power -- it spends less than 3% of its GDP on the military -- and few are really worried about Algeria developing nuclear capabilities. But any move in that direction would obviously set off alarm bells in Europe, and in the Middle East as well.

While unlikely, a scenario of growing chaos and violence in Algeria could demonstrate the negative sense in which Algeria may be seen as pivotal. A large flow of refugees to neighboring countries could be destabilizing; a radical Algeria could find itself in a state of confrontation with Morocco and Tunisia; France might try to help non-Islamist Algerians constitute a resistance movement, leading to Algerian support for terrorism in France. Various militant Islamist movements might take up residence in Algiers, drawing Algeria into a web of regional conflicts, including the Arab-Israeli dispute. An embattled, threatened regime might begin to think seriously about the nuclear option, raising fears in Europe and sparking scenarios for preemptive military action. Investments in Algeria’s oil and gas sectors could then plummet, creating shortages in energy supplies, especially for southern Europe. In this worst-case scenario, a radical Algeria in turmoil could be very bad news indeed for the West and for other moderate states in the region. To prevent such an outcome is principally up to the Algerians themselves, but Europe, the United States and others in the Middle East will have a strong interest in seeing that Algeria not go down that path.

Algeria, then, seems to qualify as at least a marginal pivotal state for two main reasons: events in Algeria can influence, for better or worse, a wide range of countries in the Middle East and Europe, both regions of importance to the United States; and Algeria is likely to be a major source of energy for Europe in the future, with all that implies for investment opportunities in Algeria for Western companies. On balance, the United States and Europe have every reason to hope that Algeria will follow a stable, positive course in the future and should be prepared to help it where possible. How that might be done will be addressed later in this paper.

THE IMPACT OF GLOBAL CHANGE

In many ways, Algeria is typical of Mediterranean countries. Even a casual visitor will notice the layers of civilization that have been left by succeeding waves of immigrants and colonizers. There is still a Berber-speaking minority living in the mountains. Alongside is the Arabic-speaking majority (mostly of Berber origins), some with names that also show Ottoman influence. And Roman remains dot the countryside, just as French architecture dominates the urban and small-town landscape. Europe and the Middle East have deeply influenced this land, and the pulls from both are still felt. Perhaps ironically, modern Algerian nationalism was first articulated by Algerian workers in the suburbs of Paris after World War I, articulating ideas of patriotism and Islamic reform that were being propounded in Cairo and Damascus.

Not surprisingly, Algerians, who were once told that their country did not exist, feel somewhat uncertain about the components of their national identity. Nearly all Algerians are Muslim of the Sunni Maliki rite, but the reality of Islam in Algeria is much more complex. One can find Sufi brotherhoods, moderate reformists, strident fundamentalists and secularists all claiming to represent a legitimate face of Islam. The early years of independence saw a premium placed on the notion of a unified people all sharing an Arab, Islamic, Algerian identity. Arabization of the educational system was a major state policy from the late 1960s on, and early in 1997 a decree was issued banning the use of French by government officials. Despite such homogenizing efforts, the reality of Algeria has remained much more diverse -- politically, culturally and socially. The Islamists regularly attack the "Party of France", as they call the regime; clannish politicians from one region form coalitions against others; the military has a subculture of its own; Berber speakers resent the attempts at forced Arabization; Algerian dialect, far from standard Arabic, includes a rich mixture of words from Arabic, Berber and European languages; the press includes a dozen newspapers, some in French and some in Arabic -- but the French papers regularly outsell those in Arabic.

The point of this sketch of Algerian culture is to show that it is much more diverse than propagandists have portrayed. Algeria absorbs political currents from the east, but also from the north. It is very much a part of the Middle East/North Africa cultural region, but also has deep ties across the Mediterranean. And for all that, it is very inward looking. It is a third-world country with first-world aspirations. Many Algerians have been to France to work, watch French television at home by means of satellite dishes, and the young dream of the comforts of Europe while sometimes supporting the most extreme of Islamist groups.

With its history and its social makeup, Algeria does not seem destined to become an Islamic state on the model of Iran or Sudan. But even if Islamists were to come to power, some have argued, they would be obliged to nurture ties to the West because of the many economic ties that exist across the Mediterranean. There is something to this argument, although it may be a bit sanguine. Still, the economic reality of Algeria does predispose it to maintain close ties with Europe. The top five trading partners of Algeria are France, Italy, Spain, Germany and the United States -- not a single Arab or Muslim country on the list. Algeria basically exports its energy supplies -- over 95% of total exports -- and imports almost everything, including some $3 billion worth of food, from the West.

While education in Arabic has made remarkable headway in the past generation, it is still the case that the elite makes sure that its children learn French -- and often English as well. Indeed, English is becoming a very popular language of study. Many Algerians still manage to go abroad -- to France, Britain or the United States -- for some of their schooling. In fact, the leader of the FIS, Abbassi Madani, received a Ph.D. in education in Britain. And for those who cannot go abroad, there is now the internet available on university campuses. Messages pass back and forth between Algerians at home and abroad by phone, e-mail and fax. Islamists and secularists alike use these modern technologies. There is no way of cutting Algeria off from the rest of the world.

As much as proud Algerian nationalists might like to run a totally autarchic state, they have finally come to the realization that they cannot. Faced with mounting repayment obligations on some $30 billion in external debt in recent years, Algerian leaders have reluctantly concluded that they must deal with the IMF and World Bank. As a result, in recent years Algeria has adopted a liberalization program that has won praise from the head of the IMF. The exchange rate for the dinar has been unified and allowed to float; the budget deficit has been reduced, and with it inflation; subsidies have been removed from most food items; and a few small steps have been taken to privatize state-owned companies. The regime, of course, continues to receive the rents from oil and gas sales, so the public sector is bound to remain quite large. But the move toward a liberal economy was very much the result of Algeria’s heavy dependency on its creditors. This is just one graphic example of the extent to which Algeria can be influenced by global trends.

As Algeria has liberalized its economy and opened the door to foreign investment, a number of large companies have made substantial investments, including British Petroleum,

Anadarko, Arco, Bechtel, Brown and Root, and Total. One might think that the appalling security situation in and around Algiers would deter businessmen, and to some extent this has been true. But where profits can be made, businessmen are quick to adapt. It is now possible to fly directly to the oil fields from Europe on regularly scheduled flights, bypassing Algiers. And the oil-producing areas are protected by fairly effective security measures. Throughout all of Algeria’s internecine fighting, there have been frequent predictions that oil installations would be targeted, but to date there has been no serious threat to the energy sector.

But Algeria’s connections to the West cut more than one way. While many Algerians have learned to live with the complexities of a dual culture, others have not. They see the materialism of the West, but realize that they cannot hope to enjoy such a standard of living. Their appetites have been whetted, but cannot be satisfied. They see the wealth of their own elite -- often earned through dubious links to western businessmen -- and they conclude that power and corruption are the means to prosperity in contemporary Algeria. These Algerians who live on the margins, often in appalling housing conditions, see in the Islamist opposition a means of ousting the corrupt establishment, removing the privileges of the French-educated elite, and opening the way for a more equitable distribution of wealth. Ironically, much of Algeria’s apparent "modernization" has fueled the turn to Islam on the part of a youth that cannot hope for much from the system that has ill-prepared it for productive employment.

The pool of alienated, unemployed young men who have made up the bulk of the Islamists’ most militant constituency will remain large for years to come. It will pose a challenge to any government, secular or Islamic. The simple demographic facts are these: population growth rates are beginning to decline and sometime between 2000 and 2005 will probably be under 2% annually; demand for jobs by new entrants into the labor force will peak around 2005, but for the next fifteen years thereafter, until around 2020, more Algerians will be seeking to enter the labor force than will be leaving it through retirement. This unavoidable reality means that any regime will have to be particularly attentive to finding a job-intensive growth trajectory. Unfortunately, oil and gas do not provide vast numbers of jobs. Already Algeria has one of the highest percentages of the population working in the public sector and should be trying to reduce those numbers for the sake of greater economic efficiency. But if this means more unemployment, there is little incentive to go ahead with privatization. So, the bad news is that demography has saddled Algeria with a generation-long problem of finding productive outlets for its young people in the national economy. The good news is that the trend toward lower population growth has begun and one can anticipate a time a generation from now when the demographic transition will have essentially been completed and a more stable society, and most likely polity, can be envisaged.

Islamism, the language in which opposition to the regime is most likely to be expressed for the foreseeable future, is not just an Algerian phenomenon. It is very much a global trend wherever substantial Muslim communities are found. Anyone who reads the writings of Algerian Islamists will appreciate the extent to which they quote from radical thinkers such as the Egyptian Sayyid Qutb and the Pakistani Abd al-Ala al-Mawdudi. FIS representatives operate all over Europe, in the United States, in Turkey, and elsewhere in the Middle East. While the extent of foreign financing has been exaggerated by some, there seems little doubt that the FIS and other Islamic movements get some help from other Islamist movements.

Often in Algeria today one hears of the influence of the "Afghans", Algerians who went to Peshawar and on into Afghanistan during the struggle against the Soviets. They came home crowned with the prestige of victorious fighters in a holy war, wearing distinctive garb, and trained in the use of arms and explosives, sometimes, it is believed, by western intelligence sources. How much these "Afghans" really played a part in the emergence of a radical brand of Islamism in Algeria is not clear, but there is no reason to doubt that there was some influence. And this, too, is a sign of how global developments can work their way back to Algeria.

Algerians who are proud of their own distinctive revolutionary past have tended to think that they are unique in other dimensions of their national experience as well. National pride has seemed to preclude much interest in the political and economic experiments of other countries. For example, Algerians have looked down on Egypt and other Arab models; they have had little good to say about Tunisia or Morocco; and the Asian "tigers" have been dismissed with a blunt "we are not Chinese". But now there are many more models that suggest comparison, and Algerians are beginning to look abroad, to Latin America and Eastern Europe, for examples of how to balance political and economic change. This too is a sign of globalization, although there is still no consensus on what lessons might be learned. But the idea of borrowing from the experiences of others is less and less a taboo.

Algeria, like most other countries, is subject to a wide variety of influences from beyond its borders -- economic, cultural, social. Algerians do not want to turn their backs on the West, but they do not want to lose their own identify in the process. The forces for change that come from the global economy and from the information revolution are felt in full in Algeria, but it is still not clear exactly how Algerian society and the political system will respond. The one option that seems excluded is a sharp break with the outside world, a complete turning inward, the reinvention of a more "authentic" Islamic community rooted in the past. True, Algerians are Muslim, and that component of their identity is likely to remain strong, but Algeria seems an unlikely candidate for the next fundamentalist state in the region.

US INTERESTS IN ALGERIA

It would be hard to make the case that Algeria is a pivotal state for the United States simply in terms of direct American interests in the country. There are, of course, some tangible economic interests, but of a modest sort. But there is no formal alliance, as with Turkey; there is no strong strategic interest, as with Egypt; and there is not much of an American presence or a developed political relationship with Algerians in any walk of life. American diplomats have relatively little contact with the reclusive political establishment in the country; only a modest number of Algerian students study in the United States; very few Americans, whether tourists, diplomats or businessmen, ever set foot in the country; and there is no sizable Algerian-American community in the United States. By all these measures, the relationship is minimal.

But there are substantial derivative interests that are tied to Algeria’s links to Europe and to the broader Middle East and North Africa region. After all, if Europe is still important to the United States, and if Algeria is important to Europe (which it is), then simple logic suggests that the Washington should not be indifferent to developments in Algeria. But such a connection says little about how the United States should conduct its relationship with Algiers.

Because of Europe’s overriding interest in North Africa, the United States could be tempted to defer to European, especially French, leadership in the conduct of relations with Algiers. But that stance assumes that there is a coherent European policy and that it makes some sense. If not, then the United States, even if its interests in Algeria are partly derived from those of Europe, has every reason to take an independent look at its relations with Algeria.

What are the American interests in the Middle East and North Africa that might be affected by developments in Algeria? At the top of any list of US interests in the region is the Arab-Israeli peace process. Algeria has largely been a bystander, but it can throw its weight in inter-Arab circles either with those who support peace or against. A genuinely radical regime, similar to present-day Iran, could actively support groups that oppose the peace process. An Islamist victory in Algiers would certainly strengthen Islamists elsewhere. It is not surprising, therefore, that many Israelis (and their supporters in the United States) are urging Washington to pay more attention to what is happening in Algiers.

But making Arab-Israeli peace the central focus of the US dialogue with Algiers is likely to be counterproductive, as will be argued in the next section. Still, we have no interest in seeing Algiers join the anti-peace camp. As is often the case, the interest here may be a "negative" one -- warding off an unpleasant development -- but that, after all, is a good part of what diplomacy is all about.

What happens in Algiers can also have an immediate impact on Morocco and Tunisia. And in both countries the United States has significant interests, including military access agreements with Morocco and some joint training and exercises with Tunisia. While these are not vital interests, they are taken seriously by the US military and serve a useful purpose. If Algeria were to become stridently anti-Western, it might pressure both neighbors to end such military cooperation.

Less tangible, but still very important, is the symbolic role that Algeria could still play depending on whether it moves along a promising course of development and democratization, or turns toward a strict Islamist agenda, or simply continues to wallow in its internal crisis. It is not too much to argue that Algeria’s path will be influential, for better or worse, elsewhere in the region. This is an important sense in which Algeria may indeed be pivotal. Already its troubles with rapid democratization and managing a militant Islamist movement have given rise to a whole range of supposed lessons that other regimes in the region are paying heed to. So, on balance, Algeria stands out as a country where the United States has modest direct interests, but significant indirect ones. What, then, should Washington do to protect its interests there?

CURRENT AMERICAN POLICY AND OPTIONS FOR THE FUTURE

When the military canceled the second round of parliamentary elections in January 1992, the United States adopted a somewhat ambivalent position. Initially the State Department spokesman seemed to endorse the decision; then, the following day, restated the American view in less categorical terms. This uncertainty has characterized policy ever since. On the one hand, it has been hard to work up much enthusiasm for the various ruling bodies that have governed Algeria in recent years. At the same time, the Islamist opposition seems to have become increasingly radical and prone to violent actions. The middle-of-the-road political groups have had a hard time organizing and building popular support.

One must be careful not to overinterpret American policy. At no time in recent years has Algeria been the subject of a full-scale policy review. A relatively small number of people in the State Department and National Security Council set the tone for policy. There are few members of Congress who are interested or informed. Algerian diplomats in Washington have adopted a low profile. Still, one can identify two distinctive trends in American thinking about Algeria.

The first school of thought argues that the Algerian regime is bound to fail in its effort to crush the Islamist opposition. It sees the Algerian public as largely behind the Islamists, and believes that Algeria, somewhat like Iran, will eventually be ruled by a government that is more or less Islamist. Remembering the price paid by American diplomacy for excessive identification with the Shah, those who follow this line of thinking argue that the United States should remain aloof from the current regime, should maintain discreet contacts with the Islamist opposition, and should wait for the dust to settle. They point to the fact that thus far no Americans have been killed in Algeria as evidence that a posture of maintaining some distance from the regime has helped protect American interests. This line of thinking had some support in the bureaucracy in 1993-94, and a low-level dialogue was maintained during those years with FIS leaders in exile.

The alternative school of thought in Washington has argued that there is nothing inevitable about an Islamic revolution in Algeria; that an Islamist regime, whatever our stance toward it, would probably be hostile to many of our broader interests in the region, such as the Arab-Israeli peace process; that Islamist moderates are likely to be swept aside by radicals if there is an Islamic victory; and that an authoritarian nationalist regime can be more readily urged to reform itself both economically and politically than a religious fundamentalist regime. This line of thinking, which has prevailed in the last few years, urges a cautious engagement with the regime, relying primarily on carrots rather than sticks to bring about economic and political change.

Proponents of both the first and second school of thought were able to agree that the United States should support the Sant’Egidio platform, which was done. Where they have disagreed is on the wisdom of the dialogue with the FIS and the merits of higher level engagement with the regime.

A stronger version of the second view has maintained that the current regime deserves more open support; that Zeroual was elected in November 1995 in a legitimate election; and that American interests would be best served by stronger backing for the regime. It sees the Islamists of all stripes as unacceptable partners and argues that the United States should support Zeroual precisely because his regime is waging a fierce battle against the Islamists. Much will hinge, this school of thought maintains, on whether the Algerian regime wins or loses this battle.

After Zeroual’s election, President Clinton sent a letter of congratulations to him which held out the prospect of a more active American role in Algeria as the country moved forward with its reforms and returned to stability. This message was carried directly to Zeroual -- and to the Algerian public -- when Assistant Secretary of State Robert Pelletreau visited Algiers in March 1996. There he laid out the logic of "positive conditionality", an offer to match steps of reform and democratization with concrete assistance of an unspecified nature. He specifically urged a political settlement to the Algerian crisis and spoke of the importance of including all groups, including Islamists, who renounce the use of violence to attain and hold onto power. No high-level meeting between an American official and Zeroual has taken place since spring 1996. In fact, there is very little contact with any Americans at the highest levels of the Algerian government.

It is probably fair to say as of late 1997 that Washington’s hopes that Zeroual would turn out to be an effective president, a capable reformer, have been disappointed in the past year. The constitutional referendum, with the strong suspicion of a manipulated vote, the problematic parliamentary elections, and especially the inability of the Zeroual regime to bring an end to the violence, have led to a loss of optimism about the near-term future of Algeria. And there is a pervasive belief in Washington that the United States can do little to influence the course of events in Algeria. This lack of belief that the United States can do much about the situation in Algiers has been a major reason for the absence of serious debate over policy. But is it really true that the United States has such limited influence?

Algerians are notoriously touchy about foreign interference in their affairs, especially coming from France. Spokesmen for the regime regularly hint that any effort to pressure Algeria will be counterproductive. But Algerians know they do not live in a vacuum, and the regime has responded to pressures for economic reform without undue complaining. Politics is, no doubt, a sensitive area for outsiders to address. Yet without political reform, it is hard to see how Algeria can find its way toward peace and stability.

American views are certainly listened to in Algiers. Even the softest comment from Washington receives top-billing in the Algerian media. That does not, of course, mean that Algerians will acquiesce in whatever the United States asks of them. But it does insure that American views will be heard and treated seriously. So, the first item of business for Americans is to decide if they want to engage in a dialogue with the Algerian regime (and with various segments of Algerian society as well), and if so, to what end. A second decision to make is whether to act alone or in coordination with Europeans. Finally, there is a decision to make on what resources to bring to the discussion.

If Algeria is as important as we have maintained, it certainly makes sense to try to raise the level of political dialogue. This means trying to develop ongoing contacts at the highest level and with the major actors in Algerian society. The thrust of the message should be clear: the United States wants to see an end to the violence in Algeria and believes that some form of political accommodation among the significant political groupings of the country will be the key to civil peace. In brief, we will support a program of economic and political reform, but will find it difficult to back a purely military solution to the problem of internal violence. The more Algeria moves toward democratization, the more it can count on American support.

To be effective, this theme needs to be conveyed in private and often to Zeroual and his closest associates. They need to be reassured that the United States is not working to bring the Islamists to power, as some suspect. But they also need to hear encouragement for a political settlement. At a minimum, this might help strengthen the hand of moderates within the regime.

Given our regional interests and Algeria’s role in the Arab world, it makes sense to discuss the Arab-Israeli conflict with Algerian authorities. But it is not wise to pressure the Algerians to move rapidly toward peace with Israel, as we have at times in the past. They have made it clear that once an agreement has been reached between Israel and the Palestinians and Israel and Syria, they will be prepared to normalize their own relations with the Jewish state -- but not before. It will do little good to push on this issue, and if the regime is seen as too compliant to American pressure, it will be vulnerable to strong criticism from its Islamist opponents. In the past, too much of the U.S.-Algerian relationship has been seen from Washington through the lens of the Arab-Israeli conflict.

Second, the United States should try to coordinate its moves with Europe. Washington has very little direct leverage, but it does have a voice that will be heard. Europe, and especially France, have the big guns of financial aid. Over $1 billion in credits is offered by Europe to Algeria each year. And Europeans hold most of the Algerian debt (along with Japanese and American banks). So, if the United States wishes to amplify its message, it should be done in coordination with Europe. But if that proves impossible, there is still a role for the United States to play alone.

Finally, we need to think of the instruments of policy that will be most useful. For example, it does not seem realistic to consider a substantial aid program. And Algeria does not need money per se to solve its problems. It does need to attract technology and investment, and here the Untied States can be helpful. It can help to guarantee American investors against losses (OPIC guarantees); it can guarantee, at very little cost, credits to the Algerian government to cover some of its imports; it can support debt rescheduling in the Paris Club when those negotiations come up in a year or so; the Export-Import Bank can become more actively involved; and it can use its influence in the World Bank and IMF to be helpful to Algeria as it proceeds with its economic reforms.

Some would argue that a policy of supporting economic development will simply make it easier for the regime to ignore the need for political reforms. There is such a risk. But the United States and its partners can make a positive link between various forms of assistance to Algeria and reform measures in both the economic and political spheres.

For example, it might be possible to convey the message to Algerian authorities that free and fair presidential elections in 2000 will be seen as an important indicator of whether Algeria is serious about democratization. Americans and Europeans should be prepared to participate on a substantial scale in future international monitoring of elections if legal opposition parties are allowed to participate. If the elections turn out to be reasonably fair, we should proceed with a number of positive programs; if they are not, we should hold back for a while.

Meanwhile we should consider small steps that might increase the capabilities of those who look like the best bet for Algeria’s future. We should try to find ways to encourage Algerian students to learn English and study in the United States, and generally to enhance cultural and academic exchanges. In addition, we should try to encourage ties with journalists, union organizers, small businessmen, and political party leaders. All of this can be done at little cost and often with the involvement of non-governmental organizations.

None of these steps alone will have much impact on developments in Algeria. At most, they can be effective at the margin. But at a time when so much is in flux in Algeria, and so much is at stake, even marginal moves in the direction of a political solution and a return to civil order is worth the effort. And if Europeans can be persuaded to work for the same outcome, then there is a real chance of having some influence. The alternatives of doing nothing, or blindly supporting an unpopular regime, are likely to be costly to American interests.