Monday, April 15, 2013

Algeria Facing the Oil Curse

On Thursday April 11th, Al Arabiya reported that violence has continued in southern Algeria for the second day in a row. The reason is that protests are occurring in response to false promises made the government. Southern Algeria is a poor region despite being rich in oil. The unemployed youth are the ones protesting not receiving the benefits that the government has promised. The problem resides in the fact that they are not being employed but they are also not being taken cared of.

These protests are a recurring issue. Earlier in March, Yahoo news reported riots happening in the same region for the same reasons: unemployment and lack of trust in the government. According to the CIA fact book 30% of Algeria's GDP is derived from oil production and constitutes 95% of the country's export earnings. The country is also a member of
OPEC and the world's 6th largest producer. The economy relies heavily on oil production and the jobs require technical knowledge that the youths in the southern region do not possess. They are not educated in that capacity and have to resort to lower level jobs or unemployment.

In order to quell the unrest of unemployment the government has resorted to using social bribes, promising housing and other types of aid. The problem with this is that they are not providing enough to satiate growing unrest and are falling through with promises facilitating mistrust.

Last week we learn about the oil curse. In the case of Algeria, we see how social benefits are being used to cover up the real problem of unemployment. However, Algeria isn't even distributing social benefits reliably. Algeria is not addressing either problem effectively. There is no employment and no social benefits for everyone.

Why should we care? As protest and violence continue, we can expect for Algeria to be another conflict hotspot in Africa. Violence in this region presents concerns for intervention and repercussions of an OPEC country going through turmoil affects oil production and prices.  Whenever oil is in danger, more concern is given to that country which can lead to 3rd party countries meddling in Algeria.

My recommendation for policy is to address one issue or the other wholeheartedly instead of doing two things half way. Policy makers in Algeria should work on education reform to better train students for jobs in the oil industry. Or on the other hand, Algeria should devote more money to social benefits so that the unemployed can receive the benefits they are being promised.



  1. Your recommendations, while ideal, do not help me understand how this will stop the violence and protests now. “Education reform to better train students for jobs in the oil industry” will take a lot of time to accomplish and will not help the currently unemployed youth who are protesting.
    I think this is a complex issue that is facing many countries in this region. In addition, if violence is used against peaceful protestors it is not unlikely to spark more protestors and potentially more violence. The oil curse may however help Algeria’s autocrats as they will have money to throw at the problem. If things continue to get worse I think we may see more rents provided to the citizens and/or more oppression.

  2. I agree that this is a complex issue but I believe that Soma is correct when she suggests that the solution would be to reform the education system. If Algeria is not using their oil money to install the rentier effect for most social programs designed to help to unemployed, restructuring the education system to provide the training for these jobs would be a possible solution. This would take a long time, and perhaps the regime does not have enough time, but any social restructuring will take time.

  3. The issue in Algeria seems to be really similar to that of the issue in Oman and Saudi Arabia, two other oil producing nations. The people are not educated, do not want to take low level jobs in the oil industry, do not pay taxes and yet want the government to care for them and decrease unemployment. I agree that reforming the educational system could be helpful in this case to make the people happy in the short-term, but it may also just increase the problem and protests because in a country with littler diversity in the economic spectrum, outside of resource wealth, there will be no jobs for the newly educated population. Instead, the state should focus on diversifying in order to create jobs and boost the standards of living. If Algeria were more business friendly, they could attempt to draw international business to employ their people once education is improved/ Also, if the people are insistent on social service increases I feel taxes would not be a totally crazy thing to encourage. With taxes come more liability of state actors to their people's wishes and thus the representation the people want. However, the regime has proven thus far that oil rents can allow them to retain power and bribe the people. Thus, the regime may just assume a similar role as the Saudis and give the people better housing and food subsidies to quiet them.

  4. This post makes it seem that the Algerian government is not allocating its resource rents effectively. It would appear that it is not fully going for a rentier approach, as it is not dedicating enough money to appease the restive south. That leads me to believe that Algeria is likely going more for the repression route, and will ultimately rely on security forces to deal with protesters if it comes to that. In the long run, I think Kristina's recommendations of focusing on developing infrastructure, education, and encouraging foreign investment will be the most promising solution for resolving the unemployment fueling the protests.