US embassy cable - 05ALGIERS2194

C O N F I D E N T I A L SECTION 01 OF 04 ALGIERS 002194 
 
SIPDIS 
 
E.O. 12958: DECL: 10/17/2015 
TAGS: PGOV, PHUM, SOCI, ECON, KWMN, AG, Press Freedom 
SUBJECT: DESPITE PROBLEMS, ALGERIAN REFORM PROCESS MOVING 
FORWARD 
 
Classified By: Ambassador Richard W. Erdman, 
for reasons 1.4 (b) (d). 
 
OVERVIEW 
-------- 
 
1. (C) Under the leadership of President Bouteflika, Algeria 
has embarked on a process of serious and sweeping reform. 
The process has been uneven, to be sure, and Algeria has a 
long way to go before it achieves real democracy, rule of 
law, habits of transparency, and open markets.  Executive 
power is not adequately checked by an independent judiciary 
or robust legislature.  Political parties still mainly 
function as instruments of their leaders and as transmission 
belts for decisions taken on high, rather than as vehicles 
for aggregating and reflecting grass roots sentiment upward. 
Algeria's legacy of failed socialism continues to weigh 
heavily, corruption is a daunting problem, and socially and 
politically reintegrating a society torn apart by more than a 
decade of terrorism in the nineties remains a major 
challenge.  With the security situation significantly 
improved, state coffers overflowing with petro-dollars, and 
the public increasingly focused on bread and butter issues, 
meeting public expectations in this area will also be 
critical. 
 
2. (C) For all these problems, Algeria is on a positive path 
toward modernization and has the resources and potential to 
become, over time, a quiet success story in the BMENA region. 
 Bouteflika has shifted the political center of gravity 
squarely into the civilian camp, following years of barely 
disguised military rule.  With the recently approved Charter 
for Peace and National Reconciliation, a framework of sorts 
has been established for reintegrating peaceful Islamic 
elements more fully into society and politics, while fencing 
off radical fundamentalists.  The press and civil society 
groups, despite some harassment, both retain their ability 
and will to criticize government actions and shortcomings. 
The economy is registering steady growth at 5 per cent or 
more and slowly being transformed via privatization, new 
non-hydrocarbon investment, and a small but important reverse 
flow of Algerians returning after having spent years abroad. 
Unemployment, though still unacceptably high, is receding.  A 
massive 5-year infrastructure investment program is under 
way.  And, with terrorism defeated strategically and his own 
legitimacy strengthened by his 2004 re-election victory, 
Bouteflika has finally begun to turn reform rhetoric into 
reality. 
 
3. (C) Specifically, the past year and a half has seen a 
significant expansion of women's rights; further progress in 
reducing illiteracy; and new legislation on judicial, 
educational, penal, criminal, and anti-corruption reform.  On 
the economic front, Bouteflika has pushed through numerous 
WTO accession-related  reforms and directed an aggressive 
privatization effort (over 200 firms privatized so far, with 
a target of 300 by the end of 2005).  He has also passed 
landmark reform legislation governing the hydrocarbon sector; 
liberalized the telecommunications sector; approved new 
anti-money-laundering legislation; authorized major steps 
toward bank liberalization; and won parliamentary approval 
for the EU-Algeria Association Agreement, which took effect 
this September.  In sum, change is occurring and will likely 
accelerate over the next 5 - 10 years as the aging liberation 
war generation passes from the scene.  While Bouteflika is 
certainly no Ataturk, intellectually willing and politically 
able to make a radical break with the past, he has recognized 
the failures of the socialist system, so far mostly used his 
dominance of state institutions to press for reform, and set 
in motion a modernizing dynamic that over time holds the 
promise of transforming Algeria's economic and, eventually, 
political landscape in the direction of democracy and open 
markets.  (End Overview) 
 
CONSOLIDATION OF CIVILIAN RULE, EXECUTIVE DOMINANCE 
--------------------------------------------- ------ 
 
4. (C) Bouteflika's resounding re-election victory in April 
2004 -- the first contested presidential election in Algerian 
history and the first in which the military remained neutral 
-- marked a watershed for military-civilian relations in 
Algeria.  It changed the basic institutional dynamic, 
increasing Bouteflika's legitimacy and making him beholden to 
the Algerian public, not the military, for his office.  It 
also led to the resignation of the longtime Armed Forces 
Chief of Staff (Lamari), providing Bouteflika an opportunity 
to reassert his formal role as the Commander of the Armed 
Forces, replace Lamari with a weaker officer beholden to him, 
and appoint new senior service and regional commanders, the 
one important exception being Military Intelligence.  The 
military's increasing focus on professionalization and 
modernization also fed this new dynamic. 
 
5. (C) At the same time, growing executive dominance has been 
fueled by the lack of adequate judicial and legislative 
checks, the general ineffectiveness of Algerian opposition 
figures, and Bouteflika's genuine popularity with the 
Algerian public, who credit him with improving the security 
situation, ending Algeria's international pariah status, 
restoring Algeria's financial health, and setting Algeria on 
a path toward national reconciliation.  A leader with a 
populist and paternalistic bent, Bouteflika has increasingly 
given the impression he sees himself as the indispensable 
leader who alone is capable of leading the Algerian people 
from the wilderness of civil strife to a new era of reform, 
reconciliation, and democratic prosperity.   While such a 
mind-set can lead to undemocratic behavior in the pursuit of 
laudable objectives, a temporarily overly powerful executive 
may be the historic price Algeria will have to pay for 
wresting power away from the military. 
 
WOMEN'S RIGHTS REFORMS 
---------------------- 
 
6.  (U) In March 2005 the Parliament amended the sharia-based 
Family Law of 1984 to permit women to transmit nationality to 
their spouse and children.  It also explicitly permits women 
to marry a foreigner. Other significant changes to the Family 
Law include: 
 
-- Marriage by proxy was abolished in an effort to stop 
forced marriages, and a common legal age for marriage, 19, 
was established for both men and women. 
 
-- When signing the wedding contract, a woman may now choose 
the male sponsor of her choice.  The institution of the 
marriage sponsor (or "wali") was retained, thus formally 
denying women full legal equality, but was in practice 
completely gutted.  Under the amended law, the woman 
contracts the marriage, not the wali on local behalf, and may 
choose any male to be her sponsor. 
 
-- Fathers are now required to ensure the provision of 
housing for all their minor children in case of divorce. 
 
-- Women can ask for a divorce and more easily conclude 
prenuptial contracts barring polygamy.  Although not 
abolished, polygamy requires the prior consent of a judge as 
well as of all spouses before an additional marriage can be 
approved. 
 
-- As evidence of the growing importance of women in the 
Algerian economy, women make up 17.5% of the work force 45% 
of these women are under 30.  A strong majority of working 
women, 60%, work in the private sector. 
 
 
JUDICIAL REFORMS 
---------------- 
 
7.  (U) Under Bouteflika, 75% of the entire legal code has 
been amended or completely changed.  This includes the Civil 
Code, Penal Code, and Commercial Code.  The Penitentiary 
Organization Code was also modified to bring Algerian 
practices up to international standards.  In addition: 
 
-- Some 55% of all judges are women and 50% of the new class 
of magistrates are women. 
 
-- The training period for magistrates has been tripled, from 
one year to three, since 2001. 
 
-- Algerians are now able to obtain their judicial record and 
any other legal or judicial data by consulting two new web 
sites maintained by the Ministry of Justice. 
 
-- The former president of the Constitutional Court was a 
woman, and two female magistrates began serving in September 
on the High Council of Magistrates. 
 
-- Courts are becoming more specialized as the training of 
magistrates expands. 
 
-- The Justice Ministry has actively sought U.S. training 
opportunities for its judges. 
 
EDUCATION REFORMS 
----------------- 
8. (U) The Ministry of National Education began reforming 
primary schools in 2004 and began targeting secondary schools 
in 2005. 
 
-- Illiteracy stands at 26.5%, down from 31% ten years ago. 
 
-- Attendance of school-aged children reached 97% in 2005, up 
from 89% in 2003. 
 
-- Between 1999 and 2005, the budget for education tripled. 
 
-- 6,000 new teaching jobs were created in 2005 alone. 
 
-- The Government extended some curriculum requirements, such 
as the teaching of Arabic and national exam requirements, to 
private schools.  Optional instruction at private schools, 
with authorization from the Ministry of National Education, 
is still allowed. 
 
-- Primary schools reintroduced French (after an absence of 
several years) starting in second grade and in 2005 began 
offering the Tamazight (Berber) language as an elective 
beginning in the fourth grade.  The study of English is 
required beginning in the fourth grade. 
 
-- The Education Minister on October 30 is signing a major 
English teaching / curriculum reform program financed by 
MEPI. 
 
PRESS FREEDOM 
------------- 
 
9.  (U) Despite harassment, highly publicized arrests, and 
prosecutions of a few journalists for alleged defamation, the 
press still is able to vigorously criticize Government and 
presidential actions.  A new satirical newspaper very 
critical of the Government, L'Epoque, began publishing in 
August.  Its editor in chief is a woman, Baya Gacemi. 
 
-- The Government of Algeria is currently revising the 
Information Code with the collaboration of journalists and 
editors.  The Information Code really amounts to a new code 
of journalistic ethics; upon its completion, journalistic 
practices would, in theory, no longer be addressed in the 
Penal Code (i.e., defamation would be de-criminalized).  The 
Information Code's promulgation is expected in 2006. 
 
-- Algeria has 45 daily newspapers, which sell a total of 1.5 
million copies, although the circulation of most of these 
papers is very small.  The 49 weekly publications sell 
622,000 copies, while the 11 monthly periodicals sell 
600,000. 
 
 
-- A television channel in the Tamazight language will soon 
be launched.  Its programming will include news programs in 
five different dialects:  Berber, Chenoui, Mozabite, Chaoui, 
and Targui. 
 
-- The International Federation of Journalists, which 
suspended its activities in Algeria in 1996, reopened its 
office in Algiers in 2004. 
 
MONEY LAUNDERING AND CORRUPTION 
------------------------------- 
 
10.  (U) While corruption remains a serious problem some 
steps have been taken to address it. 
 
-- Legislation on money laundering was officially adopted 
February 2005 and in October the government decreed that all 
transactions over 50,000 dinar ($685) must be effected by 
formal money transactions (ie checks, not cash). 
 
-- Algeria also adopted an Anti-Corruption law this year 
which implements Algeria's EU Association Agreement 
commitments, broadens the definition of corruption, and 
stiffens penalties. 
 
-- President Bouteflika has publicly spoken out against 
corruption in strong terms, asserting no one, regardless of 
position, will be exempt.  The GOA is making an example of 
certain high-profile offenders by firing or prosecuting 
senior customs officials, 60 magistrates, state energy 
company officials, and two governors. 
 
 
ECONOMIC REFORMS 
---------------- 
 
11. (U)  Algeria ratified the Association Agreement between 
the EU and Algeria this year.  The agreement was brought into 
force September 1.  In addition, as part of its accession to 
the WTO: 
 
-- Algeria has passed by executive decree several laws 
required to bring Algeria into conformity with WTO norms, 
including the Law for Copyright and related rights, 
trademarks, patent and integrated circuits; the Law on 
Commercial Practices; the Law for IPR Protection; the Law on 
Foreign Trade; the Law on the Protection of Animal and 
Vegetable Species; the Law on the Suppression of Technical 
Barriers to Foreign Trade; and most recently, elimination of 
a ban on wine imports written in to the 2005 Supplementary 
Finance Law. 
 
-- Also in July, Algeria passed a new Law on Hydrocarbons 
that more fully opens the hydrocarbon market to competition 
and foreign investment and transfers the regulatory function 
of the state energy company to a new state regulatory agency. 
 
PRIVATIZATION 
------------- 
 
12. (U) There are currently roughly 1,200 public enterprises 
that are open for privatization which will be sold off 
individually through public tenders and should be offered for 
100% foreign control.  According to the Minister for 
Privatization, some 200 of these firms have been privatized 
so far and the target for 2005 is 300. 
 
-- The Ministry of Finance released bid packets in July 2005 
offering the economy's first bank privatization. 
While state-owned businesses were privatized in the past, 
this is the first time in Algeria's history that a foreign 
entity will be allowed 51% ownership of a state bank, with 
the remaining 49% divided between the state and private 
Algerians. 
 
-- Algeria has agreed to a U.S. Department of the Treasury 
technical assistance program that will advise Algeria on bank 
privatization and will involve a resident Treasury advisor to 
help with each step of the process. 
 
 
TELECOMMUNICATIONS AND TECHNOLOGY REFORMS 
----------------------------------------- 
 
13. (U) Algeria has made substantial strides in opening up 
its telecommunications sector over the last three years and 
is now one of the regional leaders in this area. 
 
-- From 2001 to 2004, the Government spent approximately $486 
million on developing the telecommunications sector as part 
of opening the sector to competition.  Another $165 million 
was allotted to scientific research. 
 
-- The number of mobile telecommunications subscribers 
reached 11 million in 2005.  Private entities control 66% of 
the mobile telecommunications sector.  There are only 3.8 
million subscribers to land-line communications.  Though the 
land-line market is currently 100% state-owned, in March 2005 
an Egyptian consortium won the first private land-line 
license.  The consortium plans to begin operations before the 
end of 2005. 
 
-- In 2000, Algeria had 1,000 Internet subscribers.  By 2005, 
there were 100,000, with an estimated 1 million expected by 
2010. 
 
-- In 2000, there were 200 cybercafes across Algeria.  By 
2005, 6,000 were officially registered with the authorities. 
 
-- Nearly 10 million Algerians have cellular phones in 2005, 
compared to 54,000 in 2000. 
 
ERDMAN