17/07/2013

Rolling either way? Algerian entrepreneurs as both agents of change and means of preservation of the system. Part I

By Amel Boubekeur, researcher at Centre Jacques Berque, Rabat, Maroc. 

Published in The Journal of North African Studies the 6th of July 2013

Part I

In Algeria, the last two decades were marked by the increasingly visible political influence of private-sector actors.1 Emerging as new political players, major and successful entrepreneurs have generated much hope within the European Union (EU) as well as among Algerian commen-tators. Considered as potential agents of change, they have often been expected to contribute to democratisation in their country, particularly after the introduction of a multiparty system and the transition from a socialist model to a market economy in the late 1980s. Business elites’ involvement in politics was supposed to validate a formula dear to the Euromed partnership, one of whose founding members was Algeria: political liberalisation inescapably follows econ-omic development. Yet despite good economic conditions2 (IMF 2007) and the emergence of numerous influential businessmen, political and governance-related reforms are hardly advan-cing at all, as illustrated by the third term President Abdelaziz Bouteflika won in April 2009. There has been no confirmation that politicised economic actors will embrace reform and then gradually replace a monopolistic regime. To understand entrepreneurs’ potential to catalyse change in today’s Algeria, one must look beyond their direct involvement in regular party-politics, and analyse the networks and channels through which they become politicised. These conditions have important implications on the nature of their resulting relations with the political elite.

Unlike neighbouring Morocco and Tunisia, Algeria has never opted for a model of what Camau (2006) calls ‘open market authoritarianism’, in which political stalemate does not pre-clude economic reforms that bolster the country’s growth and productivity.3 Algerian auth-orities’ inability to let the market regulate the emergence of autonomous entrepreneurs primarily reflects their fear that influential business elites might come forward and compete for oil rents and other public resources. The circles of political power in Algeria, mostly com-posed of members of the security services, the army and the Front de Liberation Nationale (FLN) – the ruling party since independence – have narrowed the role of entrepreneurs, creating a sense of economic restructuring and redistribution of power whilst concurrently perpetuating their political control. Defining the ‘economic elite’ is thus an emphatically political exercise. Official discourse on this economic elite has evolved over the decades of FLN rule. Until the early 1980s, it concentrated on promoting managers of public enterprises and the state bourgeoi-sie (Raffinot and Jacquemot 1977); in the 1990s on talking about entrepreneurs, businessmen and private-sector actors; and through the late 2000s, on the encouragement of ‘national cham-pions’ serving the national economy and creating jobs and income. The political instrumentali-sation of economic actors since the independence of the country in 1962 is demonstrated by the reconfiguration of the state monopoly on rents from being public and centralised to being priva-tised and clientelist, while invariably relying on loyalist economic actors. The question is then not how entrepreneurs can reform or democratise the political system as outsiders but rather how they adapt their relationship with the ruling political elite. The aim of this relationship is both to preserve the system which is co-opting them and, simultaneously, to present themselves as agents of change in order to survive changes in the framework of the Algerian economy.

In the 1960s and 1970s, a centralised and interventionist system shaped a reliance on the control of executive managers (cadres) in public enterprises and lead to the creation of a ‘social-ist’ state bourgeoisie (Gellner and Waterbury 1977). In the late 1980s, the failure to restructure Algeria’s planned economy, the establishment of multiparty politics, decreasing oil reserves and the national debt weakened the state’s economic monopoly. To check criticism from the opposi-tion, state representatives, the secret services and the army were forced to open more space for the private sector and make their control less visible. However, the co-optation of the opposition (Islamists included) through elections and the privatisation of public enterprises in the 1990s did not favour the emergence of autonomous forces. Rather, it only allowed the authorities to extend their monopolistic hold on power. The political establishment recast alliances by legally incor-porating competing political and economic elites within the system. The Algerian regime has become a model of what the literature calls competitive authoritarian4 or semi-authoritarianism.5 (By the early 2000s, the disastrous economic effects of the civil war even allowed the FLN and the military to re-legitimise their authority to steer the national economy). The appointment of President Bouteflika in 1999 was indeed accepted by the majority of Algerians as the only way to extricate the country from the crisis of the 1990s and regain economic stability.

The relationship between economics and politics in Algeria has evolved from visibly exclu-sive state control over the economic elite to a system of opaque alliances between entrepreneurs, political elites and army officers. Even if co-optation has inhibited democratic changes since the early 1990s, it has also widened the circle of actors redistributing national resources. Despite its clientelist features, the empowerment of entrepreneurs through political alliances reflects the Algerian regime’s need to diversify its shareholding structure to ensure survival. Diversification does not imply the emergence of pluralistic politics in the short term. However, clientelism and proximity to power has been much more effective in politicising private-sector networks. These relationships have enabled economic elites to understand mechanisms of controlling rents that had long been monopolised by the military and the FLN. One should therefore analyse the extent of entrepreneurs’ current political influence within clientelist networks which arose from the restructuring of political legitimacy in Algeria through co-optation and rent distribution in the 1990s.

While Algerian entrepreneurs reveal much about the changing political configurations of their regime, the fact that they themselves profit from the current system makes it hard for them to become agents for reform. This article, then, does not look at the question of whether major players in the Algerian economy do or do not desire to advance reforms and political changes. Rather it asks what underlying interest they might have in doing so. The majority of democracy-support initiatives in the Arab world, including those of the EU and the USA, have long sought to identify and support ‘reformist actors’ and place them at the head of a new political configuration (Byman 2005). However, the case of Algerian private-sector net-works and their relationships with the political elite suggests that in the context of restructuring authoritarianism, it is not so much the change of players but the change of practices that makes a difference (O’Donnell, Schmitter, and Whitehead 1986; Huntington 1991; Camau 2002; Carothers 2002). It is the instrumental motives of this ‘embedded elite’ of entrepreneurs which must be taken into account, not their supposedly reformist, democratic or undemocratic orientation.

1962 –1979: The monopolisation of economic interest by the State and the creation of a national economic elite

Algerian authorities’ investment in the economic sphere, both formal and informal, can be traced back to the creation of the state in 1962. Before that, the French colonial system had prevented the existence of local economic elites, particularly in agriculture and industry (Dillman 2000, 9) Entrepreneurial ‘natives’ would have threatened not only the monopoly of the settlers, but also the very colonial project that denied colonised people’s representation and agency. In response to this trauma, the leaders of independent Algeria promoted a socialist economic model insisting on the dissolution of social class and the absence of ‘bosses’. Businesses left by the colonisers became public companies aimed at employing Algerian citizens en masse, often in a superficial way. The nationalisation of public companies allowed the FLN and the army to create their own technocratic economic elite. By the late 1970s, large national companies, such as the all-power-ful Sonatrach (National Society for Research, Production, Transport, Transformation and Mar-keting of Hydrocarbons, created in 1963), heralded the birth of a state bourgeoisie and Jacquemont 1977) rooted in alliances (often familial and/or regional) between political and mili-tary leaders (Tlemcani 1999, 38). Chief executives received official low ‘socialist’ wages, to which were added various forms of unofficial privileges. Enjoying rentier compensations but running ‘self-managed’ (autoge´re´es), unproductive and profitless enterprises, managers were far from being a class of competitive and creative entrepreneurs, and were in effect neutralised by the political elite. One example of this strategy of the economic elite’s domestication was found in what happened to private importers’ lobbies, such as the Groupement Professionels d’Achats. Becoming too powerful, this group was abolished by President Boumediene, who then placed each of its former members at the head of public enterprises (Dillman 2000, 42).

In 1978, the state awarded itself monopoly over foreign trade. Rather than dealing directly as a corporation with western Europe, businessmen were instead made responsible for carrying out parallel diplomacy, for example in order to facilitate international deals leading to very signifi-cant commission to political elites (Liabe`s 1984). In Boumediene’s perception, corruption neither harmed the state directly nor enriched him personally. It only allowed him to hold the economic elite under control. What must be understood here is that the state would not foster a dynamic business class capable of developing productive and competitive enterprises; it will only train managers in order to extend its control and legitimacy (Addi, Le Quotidien d’Oran, June 24, 26, 27, 2004). Public enterprises, in turn, kept Algeria’s growth rates at artifi-cially high levels while providing employment to buy support for the regime. The state became de facto the sole market regulator, picking winners and losers among the economic elite (Entelis 1999). The engineering of the state managers of public companies in the service of the socialist state ‘of the people and for the people’ is decisive in the culture of Algerian economic networks. The interweaving of informal practices by state officials and the public framework guiding and confining economic actors introduced the following paradox: ‘the public essence of the state was privatized in 1962, yet commercial activity, of a private nature, was made public’ (Byrd 2003). This culture of state monopoly partly explains the difficulties faced even today by the private sector in gaining independence from political pressure. Having risen through the state education system, and able to invest only in public companies, economic elites long relied on the state apparatus for sustenance, recognition and privileges. The state’s predatory nature prevented the development of private companies regulating, controlling and distributing wealth, and nour-ished a clientelist system where economic power is not the consequence of the productivity level but reflects the degree of inclusion into a rentier network.

 

Notes

1. This article is based on several interviews conducted by the author with major Algerian entrepreneurs, Algerian business associations as well as Algerian State representatives in 2008 and 2009. 

2. In 2007, Algeria registered a growth rate of 5%, a per capita GDP of $3,800, a daily petrol production of 1,450m barrels (which made up 2.2% of global production and 98% of the country’s export earnings), reserve currency of more than 100bn dollars and an external debt of $5bn compared with $32bn in 1994. See IMF (2007). 

3. On the links between economic reforms and political reforms, see among others (Heydemann 2004; Schlumber-ger 2006; Sufyan 2007). 

4. Although incumbents in competitive authoritarian regimes may routinely manipulate formal demo-cratic rules, they are unable to eliminate them or reduce them to a mere fac¸ade. Rather than openly violating democratic rules (for example, by banning or repressing the opposition and the media), incumbents are more likely to use bribery, co-optation and more subtle forms of persecution, such as the use of tax authorities, compliant judiciaries and other state agencies to “legally” harass, per-secute or extort cooperative behaviour from critics. (Lewisky and Way 2002) 

5. Semi-authoritarian regimes are political hybrids. They allow little real competition for power, thus reducing government accountability. However, they leave enough political space for political parties and organizations of civil society to form, for an independent press to function to some extent, and for some political debate to take place.(. . .) Such regimes often represent a significant improvement over their predecessors or appear to provide a measure of stability that is welcome in troubled regions. But the superficial stability of many semi-authoritarian regimes usually masks a host of severe problems and unsatisfied demands that need to be dealt with lest they lead to crises in the future. (Ottaway 2003) 

6. Many western policy-makers are wondering if economic actors in the Arab world indeed belong to the category of ‘new miracles actors for democratisation’. The potential for change of these actors must be considered in con-nection with the place they occupy in the political system and without believing that they are in essence a demo-cratic alternative. The same type of arguments on hopes for reform raised by the Islamists has previously been analysed by the author (Boubekeur 2006).

 

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