Recent Political Events
Political-Economic Liberalization under Benjedid, 1979-88
Former President Chadli Benjedid (1979-92)
Courtesy Embassy of Algeria, Washington
Despite his overwhelming electoral victory, Benjedid did not
immediately enjoy the same respect that Boumediene had commanded.
Accordingly, the new president was especially cautious in his
first few years in office. His tentative and gradual reforms wandered
little from the socialist course chosen by Boumediene.
Over time, however, Algeria moved slowly away from the strict
socialism of the Boumediene years. After receiving a second popular
mandate in 1985 with more than 95 percent of the vote in new presidential
elections and after making some significant changes in government
personnel, Benjedid seemed increasingly confident about instituting
sweeping reforms that eventually altered radically the nature
of the Algerian economy and polity.
Boumediene's socialist policy had focused almost exclusively
on developing the industrial sector and relied on energy exports
to finance its development at the expense of the domestic and
especially the agricultural sector. Many of these industrialization
projects were poorly designed and, instead of encouraging national
development, eventually drained the economy. Relying on state
initiative as the driving force behind economic development, large-scale
industries quickly became consumed by nationalist imperatives
rather than economically efficient ambitions. The fall of energy
prices in the mid-1980s left Algeria, which was heavily dependent
on the export of hydrocarbons, with a substantial national deficit.
Agriculture, neglected in favor of heavy industry, was underdeveloped,
poorly organized, and lacking in private initiative or investment.
The reliance on food imports meant frequent food shortages and
rapidly rising agricultural prices. Unfortunately, the crisis
was not limited to the agricultural sector. The trade deficit
was only one of Algeria's problems. High unemployment, one of
the highest population growth rates in the world (3.1 percent
per year in the early 1980s), an unbalanced industrial sector
focused almost entirely on heavy industry, and rapidly declining
revenues had eroded the state's welfare capacities and its ability
to maintain political security and stability.
Benjedid's initial reforms concentrated on structural changes
and economic liberalization. These measures included a shift in
domestic investment away from heavy industry and toward agriculture,
light industry, and consumer goods. State enterprises and ministries
were broken up into smaller, more efficient, or at least more
manageable, units, and a number of state-owned firms were divided
and privatized. Benjedid opened the economy to limited foreign
investment and encouraged private domestic investment. The new
regime also undertook an anticorruption campaign. This campaign,
aside from the obvious benefits of adding to the legitimacy of
the regime, enabled Benjedid to eliminate much of the old-guard
opposition loyal to Boumediene's legacy, thus strengthening his
With his regime consolidated, Benjedid could intensify economic
and political reform without the threat of opposition. His early
reforms had been limited to the economic sector and had ensured
that Benjedid remained in control of the reform process. By 1987
and 1988, however, he added political liberalization to the agenda
and espoused free-market principles. He legitimized independent
associations, even extending the new freedom to organize to the
Algerian League of Human Rights that had consistently criticized
the regime for suppressing public political activity and demonstrations.
In the economic sector, Benjedid gave state enterprises increased
managerial autonomy. Central planning by the state ended, and
firms became subject to the laws of supply and demand. In addition,
the regime reduced subsidies, lifted price controls, and accelerated
the privatization of state-owned lands and enterprises. Finally,
Benjedid tackled the heavy fiscal deficit by increasing taxes
and cutting spending at the central government level, as well
as reducing state-purchased imports.
Despite all these measures, or perhaps because of them, Algeria
found itself in a critical position politically and economically
in 1988. Benjedid's reforms had exacerbated an already dismal
economic situation. The dismantling and privatization of state
enterprises had resulted in rising unemployment and a drop in
industrial output. Trade liberalization, including import reduction
and currency devaluation, and the removal of price controls and
reduction in agricultural subsidies resulted in a drastic increase
in prices and an unprecedented drop in purchasing power.
The negative effects of the economic reforms were felt primarily
by the disadvantaged. In contrast, the bourgeoisie and upper classes
benefited greatly from economic liberalization. Economic measures
legalized the private accumulation of wealth, ensured privileged
access to foreign exchange and goods, and provided many with relative
security as heads of recently privatized state enterprises. The
result was widespread economic frustration and a lack of public
confidence in the political leadership.
In October 1988, this economic and political crisis erupted in
the most violent and extensive public demonstrations since independence.
Following weeks of strikes and work stoppages, the riots raged
for six days--from October 5 to 11. Throughout the country, thousands
of Algerians attacked city halls, police stations, post offices--anything
that was seen to represent the regime or the FLN. The disorder
and violence were a protest against a corrupt and inefficient
government and a discredited party. The riots were a product of
declining living standards, rapidly increasing unemployment, and
frequent food shortages. Furthermore, the riots represented a
revolt against persistent inequality and the privileged status
of the elite.
The poor economic situation was not unique to the Benjedid regime.
Even the austere socialism of Boumediene, at least as tainted
by corruption as its successor regime, had not guaranteed the
economic well-being of the masses. The high oil prices in the
1970s had allowed Boumediene to fund an extensive state-supported
welfare system, however, freeing him somewhat from popular political
accountability. The crash of energy prices in the mid-1980s undermined
this political tradeoff for a minimum standard of living and eventually
undid Boumediene's successor, who had never managed to achieve
quite the same level of stability. On the contrary, the political
and economic liberalization under Benjedid polarized society by
helping to expose the corruption and excesses of the elites while
simultaneously opening up the political realm to the masses.
The government initially responded to the "Black October" riots
by declaring a state of emergency and calling in the military,
but the demonstrations spread. Hundreds were killed, including
numerous young people, who made up the bulk of rioters in Algiers.
The brutal military suppression of the riots would have far-reaching
consequences, consequences that would ultimately lead to a redefinition
of the military's role in the political configuration of the state.
On October 10, Benjedid addressed the nation, accepting blame
for the suppression and offering promises of economic and political
reform. His hand had been forced. In an effort to regain the political
initiative and contain the damage to his regime, Benjedid lifted
the state of emergency, recalled the tanks, and announced a national
referendum on constitutional reform.
Data as of December 1993