US embassy cable - 05ALGIERS1593

UNCLAS ALGIERS 001593 
 
SIPDIS 
 
E.O. 12958:   N/A 
TAGS: ECON, ETRD, EINV, BEXP, PGOV, AG, Economic Reform 
SUBJECT: ALGERIA ECONOMIC HIGHLIGHTS 
 
AIR ALGERIE CEO SUMMONED 
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1. Air Algerie General Manager Tayeb Benouis has been 
summoned by the prosecutor in charge of the ongoing Khalifa 
Airways case. The prosecutor will question Benouis about the 
relationship between the state airline company and Khalifa 
Group CEO Abdelmoumen Khalifa. The Khalifa Group and various 
government officials are still under investigation for 
illegal activities that led to the demise of Khalifa Bank 
and Khalifa Airways, as well as the loss of billions of 
dollars in state and private savings. 
 
BANNING THE IMPORTATION OF USED CARS 
------------------------------------ 
 
2. The GOA is studying a new law that would ban the 
importation of all used cars into Algeria, expanding the 
scope of an existing importation ban on used vehicles more 
than three years old.  The growing black market for used 
cars and the ensuing increased auto emissions of older and 
less sophisticated car models has led authorities to clamp 
down on a potentially harmful trend that shows no signs of 
abating.  Enforcement of the new measure, however, could be 
politically problematic.  Previous attempts by former 
administrations to expand the ban faced opposition from 
deputies in parliament, and the new law would not be in 
conformity with the EU Association Agreement and WTO 
regulations.  During a recent visit to the Port of Algiers, 
President Bouteflika expressed his support of a total ban. 
About 70,000 used cars have been imported since 2002, valued 
at $700 million.  Most representatives of foreign automobile 
firms, eager to see increased auto sales, hope that the GOA 
will expand the existing law and ban all used car imports in 
the forthcoming supplemental finance law of 2005. 
 
HIGH-SPEED RAIL LINE FOR ALGERIA 
-------------------------------- 
 
3. The National Railroad Company (SNTF) will release an 
international call for bids on a feasibility study for a 320 
km high-speed rail line.  The line would link Algiers to 
other provinces including Bouira, Bordj Bou Arreridj, and 
Khemis Meliana.  The project is part of the GOA's massive 
five-year plan (2005-2009), which includes an allocation of 
$675 million for the modernization of the railroad sector. 
 
A NEW LAW FOR SCIENTIFIC RESEARCH 
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4. A new draft law governing scientific research will be 
examined and voted in September to amend existing 
legislation on the topic.  Minister of Higher Education and 
Scientific Research Rachid Harraoubia declared that the new 
law aims to improve structural and administrative research 
conditions as well as the management of scientific research 
projects.  The commission charged with developing the law 
will tackle the lack of funding for researchers to travel 
overseas. The draft law will also review and update the 
socio-economic objectives of scientific research and the 
list of national research programs. 
 
TRADE BALANCE SURPLUS 
--------------------- 
 
5. The National Center for Information and Statistics (CNIS) 
reported that, for the first six months of 2005, Algeria's 
trade balance recorded a surplus of $9.28 billion, an 
increase of 11% from the same period in 2004.  Exports 
increased 17.25%, reaching $19.89 billion, while imports 
increased 22% to $10.61 billion. According to CNIS, 
hydrocarbon exports represent 97.7% of the total value of 
exports, while non-hydrocarbon exports represent only 2.34% 
or the total, with a value of $454 million, representing a 
decrease of 0.8% from last year.  Industrial equipment was 
the largest single category of imported products with a 
value of $4.72 billion, approximately 44% of total imports. 
 
SIEVERS