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Arab Spring in Algeria

The Arab Spring uprising is one that has impacted many countries in the Middle East and Northern Africa with large Arab populations. The unrest has forced many countries to change the ways in which they do economic planning. It has put pressure on governments to increase economic opportunities. Ways in which governments do this is through providing more jobs or by increasing wages paid to the workers. To really understand the impact of the Arab Spring movement we must first understand what the movement is.

The Arab Spring movement is one that was motivated by issues such as unfair government policies, human rights violations, and economic decline. Specifically in the country of Algeria, the uprising came as a result of a lack of decent housing for its citizens. During these initial protests 59 people were reported as injured by police brutality. Despite these initial protests, Algeria had been able to remain somewhat under the radar during the recent years of Arab Spring protests. This is surprising considering Algeria has a rich history of political protests, which end in violence for both sides. The Algerian’s knowledge of what can happen during these political upheavals is a major reason that the country has stayed out of the spotlight.

The Algerian population was primarily seeking better food prices. In response to these demands the government implemented short-term reforms that lowered the cost of certain foods such as milk, cooking oil, and sugar. The subsidies on these goods were matched by increased wages in the public sector as well as a decrease in imports. Another major factor in the unrest in Algeria is the unemployment, especially of the youth. The youth unemployment is at 45% and will most likely rise as approximately 300,000 youth enter the work force each year.

The economic impact of the Arab Spring uprising in Algeria is seen in the lowering of taxes and increased wages in the public sector. The impact of these government decisions will most likely be seen in the consumption portion of the market and will provide households with increased purchasing power in the market. Firms will receive a benefit from these decisions as well. Firms will be able to sell more goods and therefore profits will rise within this area. As households are assumed to be the entity in charge of firms, the general population will yield both a direct benefit and an indirect benefit from these changes. Unemployment rate may also be impact positively. As firms benefit they may choose to expand and hire more workers. This will decrease the unemployment rate and help the overall economy. Rising costs of oil will also help the overall economy of Algeria, as it is one of its major exports.

Source: Algeria at the Crossroads, Between Continuity and Change
Andrea Dessi

Arab Spring Effect on Algeria

While other northern African countries are struggling because of Arab Spring, Algeria has been holding its own.  This may be because of their revolts in 1988 that led to their “Dark Decade” from 1991-2001.  These 1988 revolts led to a new constitution for Algeria, but their 1991 elections were invalidated by the Algerian army.  This unfortunately led to a civil wear that resulted in over 150,000 casualties.   This time in Algerian history is said to be why Algeria has not been hit as badly as neighboring countries by the Arab Spring.  These past years have left a big enough mark on the Algerian people that they are now thinking twice when it comes to revolting.

Because Algerians are conservative about revolting against their government, their revolts are not as threatening as surrounding countries.  These weaker riots are much easier to control.  Algeria controls these riots by using the wealth they have gotten from their oil industry.  This money is then used for increases in employees’ salaries and food subsidies.  Not only is the Algerian government trying to control the angry Algerians rioting in the street, but they are also  trying to give a boost to their economy.  Consequently, Algeria’s market is then benefitted by this increase in cash flow in the country.  More money in their economy will increase their cash flow.  It is hoped that, this will increase their economy.  This will be a great advantage to Algeria compared to neighboring countries if they can give a lift to their economy because they are already one of the least phased of countries effected by the Arab Spring.

Algeria also gave handouts to young people who are currently unemployed.  These handouts are not only passed out to help maintain their riots, but also they are intended to help these young unemployed citizens manage without a job.  Algeria will able to give such subsidies and handouts for a little while because of their large amount of foreign currency reserves of over $100 billion.  The more money in consumers hands, the more they will be willing to purchase goods.  They do face long-term trouble when it comes to one of their biggest economic markets, gas.

Their gas production has recently hit a quiescent period.  It is reported that it will soon start to decrease, consequently hurting its economy.  The Arab Spring is not helping them out in this manner because of the troubles and riots their neighboring countries are having.  This leads to a decrease in communication with them because these countries are to busy being involved with their domestic problems, and this will lead to a decrease in trading.

While it is unfortunate the Algeria had to experience the “Dark Decade” throughout the 1990’s, they are fortunate that they did go through that because the Arab Spring has shown less effect on them than on other countries.  They can also thank their money reserves.  This money has been used to settle the small amount of rioters that they do have.  The more subtle effect this money has on Algeria is that it can be used to increase spending in Algeria.  Little businesses can benefit from this money given out to potential consumers.  While Algeria’s economy is doing adequate now in the short run, the long run is the main concern for Algeria.  Their natural gas industry is planning on declining.  This is where the Arab Spring will have the most impact on Algeria’s government.  The corruption going on in surrounding countries is hurting their long term economic future, but their short term future is safe with help from their money reserves.

Algeria and the Impact of the Arab Spring

Although the Algerian government was not overthrown in the Arab Spring, and remains in place today, the country was greatly impacted by this time of demonstrations and revolutions.  There were protests in Algeria, against the high prices of food, and the high rate of unemployment. The Algerian government saw what happened in other countries, and worried that it might happen to them as well, so began to take steps to limit the discontent of the population. As this discontent as due in a large part high food prices and a high unemployment rate, the government took steps to help improve the economy.  Thus, the Arab Spring had an important impact on Algeria.

In early January 2011, riots broke out in Algeria over the increase in the cost of food, which had greatly increased, and become difficult to afford. [1] To counter these protests, and placate the population, the government instituted some protectionist policies, subsidizing important food staples such as milk, sugar, oil and flour. [2] Subsidies are a complicated part of a policy maker’s toolbox. On one hand, they protect and nurture domestic business, preventing them from being dominated by competitors on the international market.  From an economic realist’s perspective, this is very good, because then in a time of crisis, the security of your state won’t be dependent on others, and what they chose to import to your country. However, they are not popular in the eyes of other countries, who may want more free and open trade, so their industries can dominate where they have a comparative advantage. Because of these twofold implications, this is a tool that must be used carefully.

As well as instituting subsidies, the government also greatly increased general public spending in 2011. [3]  That year, government spending went up by around 27%.[4]  Government spending is one way the economy can be stimulated, as it is one of the components that comprise GDP. An increase in government spending can also go towards providing important services to those in the populace who need them.

In 2012, the government is concentrating on improving public services, as well as trying to increase wages.[5]   For civil servants in the public sector, wages went up by 34%.[6]  This could greatly help the economy by creating more consumption. When people have more income, they are more likely to spend it. This could help stimulate the economy and lead to an increase in the demand for workers, to help cope with the new, increased demand for more goods.

In the aftermath of the protests of the Arab Spring, the government is greatly focusing on one of the large problems facing Algeria today, unemployment. This was an issue at the heart of many of the riots and demonstrations that shook the country. According to the official government figures, the unemployment rate is around 10%, although some international estimates double this figure.[7] The youth unemployment rate is also incredibly high, at with nearly a quarter of all young people between the ages of 15 and 24 unemployed.[8]  The Algerian government is spending 178 billion dinars on supporting employment in Algeria.[9]  Many international observers believe that to effectively grow the economy, the government needs to diversify, as the oil and gas sectors that form a huge part of the Algerian economy provide too few jobs.[10]

The Algerian government broke up protests with force, and then tried to break the will of the protestors with some economic concessions.[11] They put subsidies into place, and increased spending with a $268 billion dollar five year economic plan.[12] They also increased wages in the public sector, and poured billions of dinar into job creation. While the foundations for some of these actions may have been laid in the past, these policies were all implemented as a direct result of the Arab Spring, and the government’s need to placate its population to keep them from rebellion.

[1] Roberts, Hugh. “Algeria’s National ‘protesta’.” Forgien Policy. January 10, 2011. <http://mideast.foreignpolicy.com/posts/2011/01/09/algeria_s_national_protesta.>

[2] Salhi, Hamoud. “Is Algeria Immune from the Arab Spring?” BBC. July 27, 2011. <http://www.bbc.co.uk/news/world-africa-14167481.>

[3] Arieff, Alexis. “Algeria: Current Issues.” Congressional Research Service. January 18, 2012. <http://www.fas.org/sgp/crs/row/RS21532.pdf.>

[4] “Loi De Finances2012: Des Mesures Pour Developper La Production Nationale.” Ministère Des Finances. http://www.mf.gov.dz/article/2/A-la-Une/199/Loi-de-finances2012:-des-mesures-pour-developper-la-production-nationale.html.

[5] Ibed.

[6] Salhi, Hamoud

[7] Background Note: Algeria.” U.S. Department of State. January 23, 2012. <http://www.state.gov/r/pa/ei/bgn/8005.htm.>

[8] Arieff, Alexis.

[9] Loi De Finances2012: Des Mesures Pour Developper La Production Nationale.”

[10] “Algeria Must Tackle Youth Unemployment: IMF| Reuters.” Reuters.com. January 26, 2011. <http://af.reuters.com/article/investingNews/idAFJOE70P0IT20110126.>

[11] Arieff, Alexis.

[12] Ibed.