Economic liberalism and the sharpening of class contradictions in Algeria – Alain Hertzmann

10 June 1989

in Articles, Khamsin Bulletin 6

This article is based on an interview with Comrade Lafif Lakhdar as well as on articles in Le Monde Diplomatique (December 1982, October 1986 and November 1988) , Le Canard Enchainé (2.11.88) and a booklet ‘Im­migration and French Imperialism‘ by Combat Prolétarien (1980). The views expressed below are my own. A.H


In October 1988 the image, if not the reality, of a radical wing in the third world received a body blow. The Algerian state, the flagship of the radical wing of the ‘non-aligned movement’, ran aground as the sea of petro-dollars on which it navigated had dried up.

The economy

Petroleum has accounted for about 95% of the export revenue of the Algerian state since its independence in 1962. Boumedienne, who became president in 1965, set the guidelines for the economic development of the country. It was to be self-reliant and independent. Algeria was to become the Japan of Africa within a generation. The emphasis was on heavy industry: steel, cement, oil refineries, petro-chemicals. From 1968 to 1980, the price of oil increased steadily, and together with money bor­rowed from a variety of international sources (private and state banks), this allowed the Algerian regime to buy whole factories on credit, ‘keys in hand’, mainly from Germany and Japan. Heavy industry, spread through­out the country, was to form poles of attraction for manufacturing and light industries.

Boumedienne intended to complete the first stage of industrialization by 1974. By 1975, it was clear that the whole process was in trouble. Indus­tries were not very productive; by and large, they worked below capacity. Workers often worked only three hours a day, and many only three days a week, as whole factories stood still, waiting for Japanese or German ex­perts to sort out the hitches, and for machine parts to arrive from abroad.

In 1975, Boumedienne called in the well-known French economist Char­les Bettelheim, who within two weeks produced a report pointing out that the administration was too centralized and that the technology sold to Algeria was archaic. As a result, Algerian industry was not competitive on the international market. Furthermore, agriculture had been completely disregarded. Vineyards had been uprooted, as the export of their produce was considered to be problematic. Orange and date-palm groves were neg­lected. The overall thinking that permeated the elite, the planners, was that it would be cheaper to use profits from industry to buy cereals and other basic products from Morocco and Tunisia than to invest in agriculture. In the 1960s and 70s, much was said about the agrarian reform; but by 1988, some 80% of the food was imported, and constituted 25% of all imports. By now 3/4 of the rural population had moved to the cities, in search of better-paid jobs. Only the older peasants remained in the villages (60% of them are over 50 years old).

The agrarian sector had suffered most from the brutality of the French army during the struggle for national liberation (1954-62). Hundreds of thousands of people lost their lives, four millions were forced to move, most herds of cattle and sheep were destroyed, forests burnt, fields left untilled. In 1962, at the dawn of independence, no official agrarian reform was instituted. Many large landlords, members of the bourgeoisie, and army and party cadres, rushed to grab land, especially the estates vacated by French settlers. An opposite movement of appropriation took place at the same time: landless agrarian workers took over estates and organized in collectives. In some cases they received help from the UGTA, the Al­gerian trade union federation, and from militant workers in the large urban centres.

Then the state authorities, relying on the farm collectives, moved against private appropriations and the parcellation of land in the hands of land­lords and some sectors of the urban middle classes. In practice, the state took over the most fertile land. The 22,000 colonial farms were regrouped into 2,000 units, without regard for rationalization in crops or in the use of the machinery. Only the administrators in the state’s agrarian depart­ment could grasp the problems, and so the individual peasant, the agrarian worker, lost in the vast general assemblies, became a passive participant. In these large estates, production is mainly export-oriented. According to figures published in 1988 by K. Merbah, the minister of agriculture, 66% of the land is privately owned and 34% in the ‘socialist sector’. These figures probably relate to the land in the alluvial areas. In the valleys and moun­tainous areas, the conditions of ownership have not changed since 1962. The land is owned by Muslim notables, both Arab and Qabil. According to Rene Dumont, as a result of the government’s policies, Algeria produces very little food for domestic consumption, generally no more than in 1962 and in some cases even less. Only 50% of the land is cultivated compared to 1963.

The economic crisis

From 1982 onwards, income from oil declined sharply. From £20 a bar­rel in 1979, its price dropped to £6 a barrel in 1988. Total oil revenues declined from £6.5 billion in 1985 to £3.8 b in 1986; in the following year they recovered slightly and reached £4.2 b; but in 1988 they went down to £4b.

In 1988, Algerian imports amounted to £3.75bn, of which one third was spent on importing food stuffs. Overall, state income dropped by 40% (or £2.5bn) from 1985 to 1988. At the same time the Algerian government decided to repay its external debt, which amounts to £13bn civilian debt plus between £4.6bn and £6bn in military debt. This has cost the Alger­ian people £2.6bn in the two years 1985-87, according to I. Ramonet in Le Monde Diplomatique. A much higher figure is quoted by Lafif Lakh­dar: some £3bn were spent in 1987 in repayments, equal to 74% of the whole state income in that year.

In the last four years, private banks have stopped lending money to Algeria. It should be noted that in 1985 Saudi Arabia was the economic saviour of Algeria (and Morocco). In 1987, Algeria’s reserves stood at £5bn only.

As a result of the economic crisis, the growth in gross national product (GNP), which according to official statistics was 5% in 1984, dropped to 2.9% per annum after that year. As the population growth is 3.6% per annum, GNP per capita is actually declining.

The government of Chadli Benjedid has chosen to follow an IMF-type line and imposed a severe policy of ‘structural adjustments’. Wages have been frozen, while subsidies of essential food have been cut. As a result, there is now a chronic shortage in basic items such as butter, meat, oil, sugar, tomatoes, cereals (semolina), and eggs.

State enterprises have stopped recruiting workers. Many young men are sent back to the army for two to three years, in order to reduce unemploy­ment. Still, the level of unemployment is officially 17% of the active popula­tion. (In reality it is at least 24% and according to Lafif Lakhdar it may even be 34%.) This is despite the fact that many youngsters are not in­cluded in the statistics, because young people have no right to work be­fore their military service. In order to lessen the pressure on the labour market, many youngsters rejected by the army are not given the ‘yellow card’, which you must produce in order to be gainfully employed, as proof that you have completed your army service or have been found unsuitable. The same yellow card is needed if you want to emigrate in search of work. This government trick has provoked demonstrations by young people able neither to obtain work nor to emigrate, which is often their only escape from unemployment. Even those entitled to emigrate find it much more difficult to do so since 1986. In France, which has absorbed most of the Algerian migrant work force, there are now 800,000 Algerian workers, and it is difficult for new ones to get in.

The migrant work-force

Algerian workers have been used as factory fodder in France since the Second World War. Proletarization and working-class consciousness preceded the proclamation of the independence in 1962. The ebb and flow of employment and of the class struggle of Algerians in France con­tinues to have direct repercussions in Algeria.

The Evian peace agreements of 1962 between France and Algeria in­cluded a contract to provide France with an Algerian work-force. The agreements had all the characteristics of the sale of goods. Migrants must be between 18 and 35 years old, the most productive age-group. This meant that most of the costs of raising children, their education, and then the cost of workers’ retirement pensions have been borne by the ex-colony. Furthermore, a sort of quality control was instituted in the form of medical screening. Between 1964 and 1968, the agreement provided for the import to France of 35,000 Algerian workers a year. When the Algerian government nationalized oil in 1971, the French state, on behalf of the bourgeoisie, retaliated by cutting down the annual num­ber of immigrant workers from Algeria to 25,000. In 1973 the Algerian government suspended emigration to France. This was a means of putting pressure on the French government to obtain economic gains, although the official reason was the large number of racist crimes and the harsh conditions of migrant workers in France.

Emigration to France has acted as a safety valve, given the level of unemployment in Algeria today. At the same time, workers’ class consciousness, acquired in France at great cost, influences working people in Algeria at a micro- rather than at a macro-level.

Material background of the social unrest of October 1988

While wages have been frozen since 1982, prices have gone up. According to government figures, the annual rate of inflation is 150%. The true figure is nearer 500%. Apart from inflation, there are also many food shortages. The sense of daily deprivation is heightened by the bad housing con­ditions. About 70% of flats are not fit to live in. Even such basic items as soap are hard to find. Even ordinary drinking water is expensive: in Oran, for example, water is sold on the street at 60 pence for 5 litres. This is due to the fact that no new wells have been sunk since 1982, and there has been little rain in the last seven years. Some people have to travel 45km to fetch water.

Economic hardship and class differentiation paved the way to the ex­plosion of October 1988. For economic and political reasons, the industrialized countries have reduced their consumption of oil, especially after 1980. The reaction of the Algerian government by 1986 was to reduce its budget expenditure by 26%, and to stop altogether any invest­ment. This policy greatly deepened the general poverty among the Algerian petty bourgeoisie, the workers and the peasants. At the same time, a new bourgeoisie hatched out of the state apparatus, including the army and the ruling party the National Liberation Front (NLF). Former military personnel of the NLF bought land, which the state started selling 3 years ago. This new bourgeoisie lives in urban centres and is employed in or connected to the state apparatus. So a new term might have to be invented for a section of the bourgeoisie: a landed bureaucracy.

The new bourgeoisie rooted in the state apparatus and the bourgeoisie that emanated from the private sector of the economy are closely related by marriages and other family ties. They form some 7% of the total popula­tion, or 1,680,000 out of 24 million people. The working class numbers 4-5 million people, or 15% to 20% of the total population. Peasants and the agricultural workers forma large but diminishing part of the population.

Unemployment has affected the whole of society, but its main victims are the industrial working class and the younger generation. Between 1977 and 1988, unemployment rose from 2.5% to 24% (or, according to some estimates, 34%) of the active population. Most of this tenfold increase was concentrated in the last few years prior to 1988. As mentioned above, that year was a year of negative growth, so the condition of the people in general, but especially of the young, was bound to worsen and social tension to increase.

The working class

The Algerian population as a whole is very young: those under 15 years old are 60% of the entire population, and those in the age-group 15-30 are another 20%.

The Algerian working class is young in both senses: in its age composition and as a protagonist of some weight on the social scene. In thirty years the working class has grown twentyfold. In 1955, there were 280,000 urban workers in Algeria, mostly in the public sector. By 1962, there were 400,000 Algerian workers in France. On the eve of independence, the bulk of the Algerian working class was extra-territorial. This situation has now changed radically: by 1988 the workers constituted some 50% of the country’s active population.

Two factors converged to balance labour supply and demand. By 1962, the traditional peasant economy was in ruins, wrecked by the double im­pact of the capitalist colonial economy and the barbarities perpetrated by the French army in its ruthless colonial war against the Algerian people. There was a massive exodus of peasants to the urban centres, forming a floating work-force, readily available to be turned into a proletariat.

The new regime in independent Algeria chose to invest mainly in heavy industry. The modern capitalist technology used to build the large com­bines left out of modern industry a large part of the abundant work-force: 46.3% of the workers are employed in building and public works, mostly in low-skill jobs.

In 1982, the public sector employed 58% of the waged labour-force; another 10% were employed in the mixed sector; and the remainder (32%) in the private sector.

Women form only 5.9% of the waged work-force. Furthermore, only 3.5% of women able to work are in waged employment. It appears that the bulk of the proletariat is of rural origin, has few skills, is male, and heterogeneous in its structure. It has a very short history of class struggle and class consciousness as a modern proletariat, but also little history of defeat.

The overall approach of the regime was one of ideological co-optation. For example, in its drive to increase productivity, beginning in 1971, the government appealed to the working class in terms somewhat similar to those used in the ‘socialist’ countries. The fact that the campaign brought few results by 1982 may mean that the working class has been ideologically neutralized but does not regard the Algerian state as its own.

In 1978 a further attempt at ideological integration was made: a General Statute of the Worker was promulgated. This was also part of an effort to ‘rationalize’ the work process. The state proposed to the working class an alliance: the proletariat was recognized as the class which was to become politically dominant. In return, the workers’ responsibility would go beyond their immediate economic role; they would have to accept a rigorous ‘rational’ work discipline, increase productivity, integrate well within the factory’s structure.

This has been the direction proposed and followed by the state ever since 1971, when it institutionalized ‘socialist’ management of the enterprises. In reality, workers’ representatives participating in management are, for the most part, bureaucrats rather than actual workers. It is indicative that the fall in productivity seems to be largely caused by bad management. Wor­kers’ disaffection and general apathy reflects the gap between the govern­ment’s grand proclamations and its practice in regard to the working class.

This is highlighted by the poor general working conditions, shown among other things by the high rate of work accidents (65,000 in 1977 alone); and by the inferior living conditions (makeshift houses often without elect­ricity, deficient transport and health service). Another, no less important, cause of workers’ disaffection is the fact that most workers have kept the mentality of people used to work at a different pace and in different ways. They have not as yet been ‘broken in’ and broken by the highly atomized and dehumanized work-system evolved by 20th century capitalists.

The conditioning is going on, but by 1982 it was a long way from succeeding. Absenteeism was 30% in the public sector (5% in the private sector). Turnover was high; in large complexes like Rouiba, it reaches nearly 40% a year, at al-Hadjar over 25%. The latter is a typical workers’ reaction, whenever conditions allow it, to hard and boring tasks. The level of the turnover in the private sector was lower, as many employers recruited workers straight from the countryside. Those figures date from 1982. It is quite likely that they have changed since then, due to the sharp eco­nomic slump.

There has been an increase in strikes (economic demands such as increase in wages) despite the fact that strikes are illegal – on the grounds that the public sector belongs to all the workers – and that the trade union, the UGTA, comprises only 15% to 20% of the active population. It seems that rather than being individually co-opted as ‘responsible’ workers, as urged by the state, the Algerian workers are in the process of acquiring a sharp­er class consciousness of their needs and their collective strength. This may have been helped by the ‘socialist’ wage differential: 1 to 20.

Until 1986, social demands were kept to a minimum, as general conditions improved due to the steady increase in oil revenue. Part of this state in­come was used by the ruling elite, the state bureaucracy, to buy social peace by expanding the free health services, guaranteeing basic educa­tion for all and promising full employment. As a result of the latter, many factories in the public sector were employing 75% to 110% over their real needs in labour.

The internal political struggle

In 1978 President Boumedienne died. In the ensuing political struggle between the reformists, lead by Bouteflika, who wanted to ‘liberalize’ the economy by giving a freer rein to private capital, and the statists, lead by Yahioui, who proposed to reinforce state planning, a section of the army won the day and installed its own candidate, Colonel Chadli Benjedid, who is the most senior officer. He comes from a traditional bourgeois family, part of that private sector that had grown well under Boume­dienne.

For the next ten years the Chadli Benjedid government practised short-­term policies which operated in favour of private capitalists rather than the state-capitalist enterprises. First, Benjedid purged the ruling party (the NLF) of its leftist elements, mainly ex-members of the Algerian communist party. As a result, the role and influence of the NLF declined. At the same time, hundreds of technocrats and bureaucrats from the two currents, the reformists and the statists, were dismissed from positions of power.

To ensure popular support while dealing with the top echelon, Benjedid inaugurated a programme ‘for a better life’. A large scheme was launched to build flats and houses, roads, universities and hospitals. Trading in fruit and vegetables was opened to private individuals with access to sizeable capital.

This policy lasted three years. After 1981, as oil prices dipped sharply, Benjedid dropped his populist stance and started an austerity pro­gramme ‘for the people’, which aroused the people’s general discontent. This time he sought support among the ‘reforming’ technocrats of the state apparatus and the large state enterprises, and part of the army (many of whom have family ties with landowners). At the same time Ben­jedid reinforced his political power, his social support, by enlarging the number of wilayat (administrative districts) and so the numbers of walis (district prefects) and reinforcing the latter’s economic powers. From now on they had more real authority than the party representatives and the regional military commanders. The prefects are directly responsible to the government. Furthermore, Benjedid encouraged the reconstitution of the traditional elites, which had been suppressed after independence be­cause of their past of collaboration with the French colonial authorities.

In 1985, as the economic crisis sharpened, Chadli Benjedid launched a definite turn towards economic liberalism, in other words, towards pri­vate capitalism inspired by the Japanese model. A new charter in this spirit was promulgated. Despite opposition from a sector of the army, the NLF, and the trade unions, it seemed that the government was going to get its own way.

Quite suddenly social unrest flared up. Opponents of the regime organized in associations such as the ‘Sons of the Martyrs’ (of the national liberation struggle) and the Algerian League for Human Rights. The NLF felt its monopoly threatened, and the leaderships of these new organizations were jailed in July 1985.

In August 1985, Islamic fundamentalists started a guerrilla group only 40km from the capital, Algiers. The Algerian army took two months to crush it. Finally, Ben-Bella and Ait Ahmed, two leaders of the opposition in exile, and historical figures of the Algerian Independence struggle, pub­lished a proclamation against the Chadli Benjedid government. Confronted with this onslaught, reformists and radicals within the regime closed ranks. The new charter was watered down very considerably. The reformists had to back down. From 1985 to 1988, political immobility and paralysis became the hallmark of the Chadli Benjedid government.

Popular discontent grew apace in the years 1985-88. By then Chadli Benjedid realized that it could be used against him in the December 1988 congress, in which the official candidate for the 1989 presidential elec­tion was to be nominated. Time was now against him. On 20th Septem­ber 1988, Benjedid made a speech which threatened the left wing of the NLF. But the army had already made a move in August 1988, lending support to students’ protests against Benjedid.

The October events and their aftermath

After Chadli Benjedid’s speech, the UGTA (trade unions) in Algiers, with the support of the left of the NLF, organized strikes in industries at Rouiba, near the capital. The workers demanded the end of the wage freeze. Immediately other factory workers followed. The workers had had enough. Post-office and railway employees joined in. A general strike was in the offing. The mass manipulation exploded into a mass protest. The army stopped a march towards Algiers. Students mobilized. Riots started on 4th October, directed against state buildings and obvious symbols of private wealth. It was significant that the rioters were mostly young and came from the poorer quarter of Algiers, the Casbah. The involvement of the older generation and of the Muslim fundamentalists was relatively marginal, not a crucial element.

It is important to note that the army was used to crush the riots, not the anti-riot squads or the police which are under the home affairs minister, Khediri, a supporter of Benjedid. This was done to compromise the army which was perceived by Benjedid as a major force capable of opposing his continuing rule. Order was reestablished by the army in a most brutal way, including the use of torture against prisoners. The army lost a good part of the prestige it had enjoyed since the days of the national libera­tion struggle.

The trade union (UGTA) and the party (the NLF) were politically weaken­ed after this episode. The party was made to appear as the scapegoat. The number two of the party, Messaadia, who is pro-Soviet, pro-­Khadafi, pro-Polisario was dismissed. Chadli Benjedid came out of the riot episode strengthened in the short term. He received many-sided foreign support immediately after the 4th October riots. Morocco sent vegetables, European countries sent butter and meat. The price of essen­tials tumbled by 60%, as the markets were full.

France was most prominent in this display of support for Chadli Benjedid. A good example was mentioned by the satirical weekly Le Canard En­chainé (2.11.88). In 1982-85, France was paying a political price (that is, a price higher than the world market price) for Algerian gas. But from 1986 to 1988, commercial prices were being paid. Shortly after October 1988, President Mitterand put pressure on government departments to up the price of the gas bought from Algeria. The French president also proposed to free £180 million of arrears to insure Chadli Benjedid’s survival and stabilize the Maghreb.

The Tunisian government ordered its army to be at the ready to march into Algeria to help put down the riots in Algiers if necessary – a fine example of bourgeois internationalism. At the same time, on 5th October, wages were raised in Tunisia. Then the Tunisian head of state went out to tour the streets to make sure that prices were kept down. He demanded the same restraint from private industry. The whole bourgeoisie in the Maghreb took a fright from the popular explosion in Algeria.

Quo vadis, Algeria?

Algeria is drifting towards a kind of Sadatization of the regime. This will be the reality of the slick programme of ‘democratic opening’ of the new constitution which promises freedom of expression, pluralism in elec­tions, formation of tribunes or currents within the party and autonomy of the mass organizations, and also formation of a trade-union move­ment. In effect, Chadli Benjedid’s liberalized Algerian society will allow a superficial political pluralism, while the social and economic crisis will go on deepening.

Regarding social and economic improvements for the mass of the Algerian people, the situation is blocked. The world economic crisis has placed developing countries such as Algeria in a weak bargaining position. Even the attempt at a kind of common market of the Maghreb will not help much, as Tunisia and Morocco export the same kind of product, broadly speaking.

Chadli Benjedid has won a temporary reprieve with the support from Arab countries, and especially from France. Even if he falls, another very similar ruler would emerge. Algeria, it seems, has joined the ranks of many developing countries where the change of rulers indicates that another individual has reached the top of the political pyramid, or at best another section of the ruling class, the new bourgeoisie which has emerged in those countries over the last thirty years. The development model followed by the Algerian elite since 1962 has not brought about socialism in the country. The best that can be said of it is that it has helped to mould the class that will have an interest in bringing socialism about: the working class and some sort of peasant collectives. Socialism in Algeria will remain a distant dream until Western capitalist countries weaken considerably or undergo an even more considerable socio-economic change.

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