BRIEFING MATERIALS FOR THE PRESIDENT'S MEETING WITH PRESIDENT BENDJEDID, APRIL 1985

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP85T01058R000405960001-2
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 60
• Document Creation Date: December 22, 2016
• Document Release Date: April 27, 2010
• Sequence Number: 1
• Publication Date: April 1, 1985
• Content Type: REPORT

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Directorate of It Secret
Intelligence 5N jI
Briefing Materials for the
President's Meeting With
President Bendjedid,
April 1985
State Dept. review completed
Secret
NESA M 85-10051
April 1985
C O P Y 1 01
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BRIEFING MATERIALS FOR THE PRESIDENT'S
MEETING WITH PRESIDENT BENDJEDID, APRIL 1985
Contents
I. O
A
II.
bjectives
. Algeria-US Relations: More Than Meets
Chadli Bendjedid: A Political Profile
the Eye
25X6
III
.
Key Foreign Policy Issues
A. Algeria Realigns Itself in Middle East Politics
B. Algeria: A Key State in the Maghreb
C. Algeria Cools Its Ties with the Soviet Union
D. Algeria and Western Europe: Shaking off Bad Memories
IV. Military Issues
A. Algeria: The Search for Arms
V. Economic Problems
A. The Algerian Economy: Handling the Oil Slump
B. Algerian Natural Gas
C. Algeria's Nuclear Program and Prospects
VI. Political Dynamics of Algeria
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SECRET
Central Intd 25X1
DIRECTORATE OF INTELLIGENCE
1 April 1985
ALGERIA-US RELATIONS: MORE THAN MEETS THE EYE
President Bendjedid will be the first Algerian head of state
to make an official visit to the United States since Algeria's
independence in 1962. Bendjedid almost certainly sees his visit
as the capstone of his attempts to gain international recognition
as an Arab and a Third World leader. He also will be looking for
Washington's approval of his cautious but consistent efforts
during the past several years to move Algeria away from its
earlier radical image. In addition, he will use his meetings
with US officials to reaffirm Algeria's commitment to expanding
ties with the United States. The Bendjedid regime is
particularly sensitive to what it believes is a lingering
perception in Washington that Algerians are radicals, support
terrorism, and are too closely aligned with the Soviet Union. He
will want to focus discussions on economic development and
regional stability.. 25X1
Political Interests
Bendjedid is likely to stress Algeria's role as negotiator
on various Middle East issues. He will point to Algeria's
efforts to mediate the Iran-Iraq war, to bring together Syria,
Jordan and pro- and anti-Arafat groups, and to effect the release
of US hostages in the Middle East. The Algerians believe that
the Hussein-Arafat agreement merits serious consideration, but
Bendjedid is likely to remind US officials that Syrian
participation is essential for the success of any peace
.proposal. Bendjedid almost certainly believes that Arab
recognition of Israel's right to exist is inevitable. He will
25X1
This memorandum was prepared byl lof the Maghreb Branch,
Arab-Israeli Division, Office of Near Eastern and South Asian Analysis. Information
as of 1 April 1985 was used in preparation of this paper. Camtents and queries are
welcome and should be addressed to Chief, Arab-Israeli Division, 25X1
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encourage Washington to recognize the right of Palestinian
self-determination.
Bendjedid may ask for US assistance in prodding Morocco to
look for a peaceful settlement of the Western Saharan dispute.
Bendjedid believes that his willingness to meet with Moroccan
King Hassan in 1983 and his proposal earlier this year--that
Western Sahara would control its internal affairs while Hassan
would be its titular ruler and represent the Saharans in
international organizations--are clear signs that Algeria wants a
negotiated solution. The Algerians view Morocco's construction
of the berm in Western Sahara and its intransigence in recent
talks as evidence that Hassan is interested only in a military
Bendjedid will support Washington's concerns about Qadhafi's
destabilizing activities in North Africa and the need to counter
Libyan influence in the region. Algiers is particularly iritated
by the Moroccan-Libyan union, which it sees as being directed
against it and would like to see the agreement's demise. At the
same time Bendjedid is unlikely to support Washington's efforts
to isolate Libya, so as not to provide Qadhafi with any excuse
for meddling inside Algeria.
Security Issues
Algeria's commitment to diversify its sources of military
equipment and upgrade its military technology is an important
element in the rapprochement with Washington. Algiers also sees
diversification as a way to shake off the close identification it
has had with the Soviet Union and to enhance its nonaligned
credentials. 25X1
Algerians are generally cautious in their military planning
and are not likely to ask for equipment that they do not need or
cannot assimilate into their inventory. For the moment, the
Algerians are interested in US military training and equipment to
maintain and enhance Soviet materiel already in place. The
Algerians hope the visit will strengthen the prospects of
Congressional approval for Algerian purchases of defense items
under the Foreign Military Sales program, to which Algeria has
just been added. In the long term, depending on Algerian
perceptions of Washington's response to this request,. Algiers
could ask for US fighter aircraft, tanks, helicopters, and
armored personnel carriers. 25X1
Economic Assistance
Unlike most Third World leaders visiting Washington,
Bendjedid will not ask for financial aid. Despite a soft oil
market, the Bendjedid government has handled the sharp drop in
oil and gas sales with a sensible austerity program and has
maintained an excellent international credit rating. Algeria is
still committed to socialism, but Bendjedid and his advisers have
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Secret
Algeria-US Trade, 1980-84
Manufactured goods
Food stuffs
Fuels
Other
Imports
Exports
Balance
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placed greater emphasis on decentralization and opening up the
economy to the private sector. Algeria will seek US help in
developing sectors of the economy that were neglected by previous
regimes, such as agriculture and water resource management. The
issue of US purchases of Algerian liquefied natural gas may be
raised, according to the US Embassy, but the Algerians realize
that their insistence on maximum prices precludes any significant
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Significant Dates in Algerian-US Relations
September 1983--Vice President Bush visits Algeria culminating
series of high-level US visits. since 1982 when Algerians signaled
they wanted improved relations.
1Q80--Algeria agrees to negotiate release of US hostages in Iran.
October 1980 - US provides relief assistance to victims of the
El-Asnam earthquake.
November 1978--Algerians request US medical team to save life of
President Boumediene.
1977--Algerian Ambassador appointed to Washington.
November 1974--Relations reestablished after visit in October of
Secretary of State Kissinger to discuss Middle East situation.
April 1974--President Boumediene visits United Nations and pays
unofficial visit to President Nixon.
1970--American Black Panther leader Eldridge Cleaver granted
political asylum and makes Algiers the group's headquarters.
Encouraged to leave two years later after Algiers decides no
longer to support terrorism.
June 1967--Algiers breaks relations with Washington after
Arab-Israeli war and nationalizes several American-owned firms.
October 1962--Beginning of 20 years of frosty relations between
Algeria and United States as a result of President Ben Bella's
visit to Cuba immediately after visiting Washington during Cuban
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25X6
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25X1
Central Intel ligenoe Agency
DIRECTORATE OF INTELLIGENCE
1 April 1985
CHADLI BENDJEDID?: A POLITICAL PROFILE
President Bendjedid publicly espouses an amorphous,
nondoctrinaire socialism; in his private life he is a successful
capitalist. His stated_priority is to provide a better material 25X1
life for his countrymen. In foreign policy, he does not seek to
play the aggressive leadership role that his predecessor did in
s often stated openl that Algeria
h
d h
,
a
e
an
Third World forums
25X1
does not believe in exporting 'its revolution.
predecessor in that he wants first to be President of Algeria,
not president of Africa or of the Third World. 25X1
As he charts a new course for Algeria, Bendjedid is aware
that he is not entirely free-to discard the radical policies or
rhetoric of the past. Algeria's eight-year struggle against the
French for independence (1954-62) and?its revolutionary ideology
are still the basis of his legitimacy. Although Bendjedid has
reduced the importance of Algeria's role as patron of liberation
movements, he does allow revolutionary leaders*--who elicit
little if any sympathy among Algerians--to pass through
* Algerian officials occassionally_meet with such revolutionary
leaders as Antonio Cubillo Ferreira, secretary general of the 25X1
Movement for the Self-Determination and Independence of the
Canary Islands (MPAIAC) and Goukouni Oueddei of the Transitional
Chadian Government of National Unity (GLINT).
This memor tan was prepay by of the Maghreb Branch,
Arab-Israeli Division, Office of Near Eastern and South Asian Analysis. Information
as of 1 April 1985 was used in preparation of this paper. Caaments and queries are
F -7
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Algiers. For reasons.of principle, he still feels obliged to
give rhetorical and material support to the Polisario Front and
the PLO.
Despite these gestures, Bendjedid is not a revolutionary who
clings to the past. Public pronouncements reveal he is strongly
committed to preparing Algeria's postrevolutionary
generation--whose members are already in their early
twenties--for the responsibilities of governing and keeping the
country on its course of development. Bendjedid has been openly
concerned about appointing younger officials to decision-making
positions. Several years ago, Bendjedid announced that serving
with him during the revolution was not enough for a person to
receive a government or party position. Believing that Algeria's
success lies partly in the hands of knowledgeable experts rather
than exclusively with the military, Bendjedid has substantially
increased the number of technocrats--many of whom "missed" the
revolution--in the government.
25X1
Bendjedid and the United States
In addition to dispelling misconceptions about Algeria,
Bendjedid probably also wants to use his trip to Washington to
"get to know" Americans and their political.system. Bendjedid
has had little direct exposure to Americans, and most of his
knowledge of the United States probably has been through other
colleagues'' impressions. Bendjedid does not view himself as
anti-US, but suspicion and a limited understanding of the United
States have probably contributed to conflicting attitudes. 25X1
Bendjedid almost certainly considers an official visit to
Washington as an important step in the steady maturing of
Algeria's revolutionary regime and the self-confidence of its
leader. Moreover, Bendjedid probably believes his contacts with
senior US officials in Washington will enhance his credibility
among other Arab leaders as a bridge between radical and moderate
groups in the Middle East. 25X1
Bendjedid is not likely to allow ideological and policy
differences between Algiers and Washington to interfere with his
efforts to cultivate a cooperative relationship with the United
States. Like most other Arab leaders, he believes US policy will
always favor Israel and distrusts US motives on Middle East
issues. Likewise, Bendjedid is especially sensitive to what most
Algerians regard as US favoritism toward Morocco and "excessive"
US-Moroccan military cooperation. Bendjedid will also be quick
to point out that even though Algeria is trying to diversify its
military equipment, its commitment to nonalignment includes
active relations with Moscow. On these issues, Bendjedid will be
frank in,conveying his views, but he is likely to avoid
polemics.
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25X1
Maturing on the Job
When Bendjedid was-elected President in 1979, US Embassy
officials in Algiers reported that Algerians were delighted that
a bourgeois would succeed the revolutionary ascetic Houari
Boumediene. Aside from that observation, most comments about him
were negative. Reports in the foreign media echoed the
impressions of some political observers in Algeria that he was
barely literate. The local rumor mill also claimed that he was
the puppet of the powerful Col. Merbah Kasdi (aka Abdellah
Khalef), longtime chief of military security under Boumediene and
who is accompanying Bendjedid in his current capacity as minister
of Agriculture and Fishing.
These initial impressions have given way to respect for
Bendjedid's demonstrated political cunning in easing out
opponents and acumen in redirecting domestic and foreign
policies. We see Bendjedid as a man grown. confident in his job,
sure of his footing, and firmly in control. An activist
President, he makes frequent public appearances within the
country. Western diplomats and journalists concur that he is
popular .
Rise to Power
Bendjedid had demonstrated political skills during a 17-year
career as a military region commander (1953-64 in Constantine;
1964-79 in Oran). Journalists and Western diplomatic observers
have noted that he carved out a fiefdom for himself in Oran,
where he wielded substantial political as well as military
power. During that period, he sometimes clashed with Boumediene,
ignoring or openly questioning national policies with which he
disagreed. 25X1
The same Western diplomatic observers have also noted that
as a regional military commander Bendjedid demonstrated other
skills and attitudes that have since served him well--an
egalitarian, sympathy, a preference for behind-the-scenes
maneuvering, a capacity for candor, and the ability to move
quickly and ruthlessly against opponents. By the end of his
tenure in Oran, Bendjedid, then a colonel, was the senior officer
in the Army. He was named de facto Minister of Defense in
September 1978, when Boumediene became fatally ill. Following 25X1
Boumediene's death three months later, the military forced
Algeria's sole political party, the National Liberation Front
select Bendjedid as a compromise presidential candidate.
No official biography of Bendjedid has been published, and
we know little about his early life. Born in 1929 near Annaba in
eastern Algeria, he has stated that he came from a well-to-do
peasant family. He received an elementary education at a local
French school and later studied Arabic and religion at a
traditional Islamic school. At 26 he joined the Algerian
underground to fight against the French, and he eventually rose
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through the ranks to command numerous operations with guerrillas
The Personal Side
Like many in Algeria's elite, Bendjedid has accumulated
considerable wealth, although he is careful not to flaunt it. He
is a part owner of at least two hotels, maintains stables, and
enjoys sailing and other water.sports. Bendjedid has been
married twice; his second wife, by whom he has three children,
plays a limited public role.
US and other foreign observers have described the avuncular
Bendjedid as protocol conscious but very much at ease with
himself, a man of quiet charm and humor. Bendjedid's knowledge
of French is almost certainly as good as his Arabic, but his
insistence on using Arabic as the official language during
foreign visits points to his commitment to portray Algeria as
Arab? Islamice and nonaligned. He almost certainly does not
speak English.
Because Si Chadli is Bendjedid's nom de guerre, his name
frequently appears in the foreign press in reverse order, that
is, Aendjedid Chadli. He is often referred to as Colonel
Chadli.. Bendjedid, however, is his officially recognized
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m ~,< Agerxy
DIRECTORATE OF INTELLIGENCE
1 April 1985
ALGERIA REALIGNS ITSELF IN MIDDLE EAST POLITICS
The most significant shift in Algeria's foreign policy under
President Bendjedid has been amore active role in promoting
stability in the Middle East. The Algerians are maintaining
close ties with Syria and radical PLO groups while increasing
cooperation with Arab moderates. Algeria has not moved
completely into the moderate Arab camp or given unqualified
support to recent PLO-Jordanian peace efforts. Nevertheless, the
change in its position is dramatic compared with only a few years
ago when it was an active participant in the Steadf astness,Front
set up.af ter Egyptian. President Sadat's visit to Jerusalem.
Indeed, Cairo now sees Al iers as a key player in any Middle East
peace initiative. ~ 25X1
Bendjedid's active role in Middle East politics reflects a
maturing of the leadership and a willingness on the part of .
Bendjedid to expand his responsibilities as an Arab statesman.
In our view, Bendjedid's first term is best characterized as a
period_of consolidation of power with an emphasis on domestic
issues. As a second-term president, Bendjedid appears eager to
develop a.positive role for Algeria in the international
community, and by gradually placing his men in key positions, he
has reinforced his mandate to go forward with his policies.
A host of factors have 1e~3 Algeria to reconsider its place 25X1
in the Arab lineup and its role in Middle East politics during
the past several years:
s memorandum was prepared by of the Maghreb Branch,
Arab-Israeli Division, Office of Near Eastern and South Asian Analysis. Information.
as of 1 April 1985 was used in preparation of this paper. Comments and queries are
weloaae and should be addressed to Chief, Arab-Israeli Division,
NESA M# 85-10051
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-- Algeria has been increasingly affected by the political
ferment that Islamic fundamentalism, religious radicalism,
and political subversion have produced in the Middle East
during the past several years.
-- The increasing use of terrorism as a political tool has
caused_Algeria to reevaluate its support for revolutionary
groups, as the ~3endjedid government believes terrorism has
served only to increase instability in the region.
-- Although the Algerians at one time encouraged the
polarization of the Arab world into competing moderate and
radical camps, Algiers has come to realize that this has
weakened the Arabs' ability to offer constructive
solutions to the Arab-Israeli conflict.
-- Finally, the turmoil in Lebanon and increased factionalism
within the PLO have further reinforced Algiers' view that
instability in.the region has undermined the Arab ,stand
against Israel.
Support for the PLO
Algeria's more active role in Middle East politics has been
driven in part by the Palestinian issue. Algeria is one of the
few Arab states that has maintained open communication with all
~PLO~groups while supporting Araf at's leadership. Algiers
provides sanctuary to about 2,000 Palestinians evacuated from
Lebanon and allows these fighters to train on Algerian military
equipment. Bendjedid believes an independent and unified
Palestinian national movement is a critical factor in the Arab-
Israeli equation and, thus, advocates a strict policy of
noninterference in Palestinian internal affairs. Algerian
officials also have stated that a unified PLO is necessary to
deter more radical Palestinian elements from returning to
For the past two years, the Bendjedid government has been
called upon by other Arab leaders to work with Syria and its PLO
allies to reconcile differences with pro-Arafat groups.
Bendjedid's decision not to act as host to last year's Palestine
National Council meeting in Algiers no doubt reflected his
concerns about Syrian threats that radical PLO groups would not
attend. Bendjedid probably believed this would formally split
the PLO--an.act for which the Algerians do not want to be
responsible.
Backing Away from the Radicals...
Of greater importance for IIS interests is Algiers' pulling
away from the radical Arab states. Algiers has rebuffed Syrian,
Libyan, and Iranian.. efforts to reconstitute the radical
Steadfastness Front. The Bendjedid government has stopped
routinely supporting the radical Arab states on the Palestinian
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issue because of what it views as Syrian and Libyan efforts to
preclude progress toward PLO unity. We believe that Algiers
probably realizes that recognition of Israel's right to exist as
well as reestablishment of relations with Egypt are inevitable--a
position in sharp contrast to that held in Damascus, Tripoli and
Algiers' resistance to join the radicals also reflects its
desire to mediate the Iran-Iraq war. Algeria's inclusion along
with Iran in the radical front, in Algeria's view, would
jeopardize its ability to represent both parties in any
negotiations. According to the IIS Embassy in Algiers, Algerian
officials reassured other Arab leaders that Algeria's
participation in a meeting with Syria, Libya, South Yemen, and
Iran in Damascus last month was nothing more than part of
continuing contacts with other Arab states.
...Toward the Moderates
Bendjedid's recognition of Araf at's leadership and tacit
approval of his efforts to work with Jordan on a joint approach
to peace negotiations bring Algeria even more in line with the
moderate Arab coalition of Saudi Arabia, Jordan, and Egypt. The
moderates are particularly pleased with Algeria's insistence on a
Palestinian consensus for any peace formula and its efforts at
.mediating Syrian-PLO differences. Jordanian and Egyptian
officials believe that Algeria's close ties to Syria and its
Palestinian surrogates make Algiers the best hope for persuading
Syria not to block a settlement.
Algiers' determination to move closer to the moderate Arab
states extends beyond compatible views on the Palestinian
question, the Arab-Israeli conflict, and the Iran-Iraq war. The
Bendjedid government has come to realize that Jordan, Saudi
Arabia, and Egypt can be helpful in achieving Algeria's own goals
in North Africa:
-- Bendjedid has asked Ring Hussein, Ring Fahd, and President
Mubarak to use their personal ties with Moroccan Ring
Hassan to modify what Algiers believes has been Moroccan
intransigence on the Western Sahara issue, according to
Embassy sources.
-- In support of Algeria's arms procurement program, Algiers
may want to draw on the experience of Jordan, Saudi
Arabia, and Egypt for guidance in procuring and
integrating Western and US military equipment.
-- Along with other Arab leaders, Bendjedid believes Qadhafi
is a major threat to Middle Fast stability and sees Saudi
Arabia and Egypt in a position to cooperate in countering
Libyan subversion.
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Outlook
Bendjedid's interest in promoting Algeria as an important
contributor to regional stability will not translate into quick
and consistent support of US policies in the Middle East.
Algeria is unlikely to take the lead in forging solutions to
intra-Arab disputes. We anticipate that Algiers will prefer to
use its influence behind the scenes to urge a consensus and keep
its role discreet. 25X1
Algiers has little. leverage over Damascus but will do what
it can to resolve Syrian-PLO differences, including working with
othei Arab leaders to temper Syrian objections and develop PLO
unity. If the issue is controversial, as in the case of the
Hussein-Araf at agreement, the Algerians probably will remain
silent or convey their position privately. Algiers will
continue, however, to take a more open position on issues of 25X1
principle, such as publicly criticizing.Syria and Libya for
encouraging factionalism within the PLO.
As Algeria's relations with moderate Arab states improve, we
believe Algiers will be more willing to cooperate with Washington
on issues it views as debilitating or dividing the Arab
world--Libya, the Iran-Iraq war, Western Sahara, and terrorism.
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crntral InodUgrnce Agaxy
v~anrgonac~osos
DIRECTORATE OF INTELLIGENCE
1 April 1985
ALGERIA: A REY STATE IN THE MAGHREH
Size, wealth, and location make Algeria a focal point in
North African affairs. Algeria's policy in. the Maghreb is
.founded on the belief that regional stability best serves
Algiers' political and economic interests. Bendjedid has
promoted regional cooperation under the theme of "greater Maghreb
unity" to preclude encirclement by unfriendly states, encourage
economic interchange, contain Libyan adventurism, and assert
Algerian leadership. At the same time, Algeria remains heavily
involved in the,most divisive issue fn the region--the Western
Regional Relations
The most concrete result of Bendjedid's regional initiatives
is the friendship treaty with Tunisia in 1983, which Mauritania
later joined. Good relations with Tunisia serve as a practical
means of securing Algeria's economically important gas pipeline
which passes through Tunisia. In addition, the uncertain
Tunisian succession~is seen by Algiers as a threat to regional
stability, particularly if Libyan leader Qadhafi tries to exploit
any political uncertainties regarding Bourguiba's heir. In such
an event, Algeria probably views itself as the only regional
power with the ability to present a credible deterrent to Libyan
meddling in Tunisia.
Algerian relations with Libya are strained and likely to'
remain so as long as Qadhafi remains in power. The Algerian
. s memorandum was prepared by the Maghreb
Branch, Arab-Israeli Division, Office of Near Eastern and South Asian Analysis.
Infoaaation as of 1 April 1985 was used in preparation of this paper. Comments and
queries are welcome and should be addressed to Chief,, Arab-Israeli Division, ,,~v~
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President has a personal dislike for the Libyan leader based in
part on Qadhafi's support for_9endjedid's opponents in the
presidential election in 1979. Algeria regards Libya's efforts
to export its revolution and to effect mergers with neighboring
states as a direct threat to Algerian and regional security.
Particularly irritating to the Algerians is Tripoli's
rapprochement with Rabat and the subsequent Moroccan-Libyan union
signed last August. Algeria views the union as a tactical move
by Morocco to block Algerian efforts to promote regional unity
and to end the Western Sahara conflict. Algiers hopes the
personal incompatibilities between Qadhafi and Morocco's Ring
Hassan will break up the "marriage of convenience." We believe,
however, that Hassan will try to keep the union together until a
solution to the Sahara war is found or until Qadhafi turns
against Morocco by renewing support to the Polisario.
Algeria has maintained excellent relations with Mauritania
for the past several years. The change of regime in Nouakchott
last December and shift away from a strong pro-Polisario position
does not appear to have affected the relationship. Furthermore,
Mauritania may soon renew relations with Morocco. Algerian-
Mauritanian relations, however, arelikely to remain good as long
as Nouakchott does not move too far toward the Moroccan position
on the Western Sahara issue.
The Polisario Issue
Bendjedid has shifted Algerian policy on Western Sahara
during the past year from a position of demanding full
independence to one involving an autonomous status for the
territory under Moroccan sovereignty as part of an effort to
encourage regional cooperation. Algeria has undertaken several
initiatives to find a solution to the conflict, including an
Algerian-Moroccan summit in February 1983 and most recently talks
between high-level officials in December and January. For the
moment, negotiations are stalled over what Algeria sees as
Moroccan intransigence to maintain the status quo. We believe
that both sides continue to support the notion of dialogue and a
peaceful solution, but the distrust between Rabat and Algiers
makes a negotiated settlement difficult to achieve.
Algiers continues to provide strong political support to the 25X1
Polisario. Longstanding efforts to seat the Polisario's self-
proclaimed Saharan Arab Democratic Republic (SDAR) as a member of
the Organization of African Unity finally paid off last year. In
addition Algiers is attempting to have the Polisario seated in
the Nonaligned Movement.
25X1
Algiers' assertiveness on the political front has been
accompanied ,by some restraint on Polisario military activity.
For example, Algeria does not allow the guerrillas to cross
directly into Morocco from Algeria. Algeria will continue to
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provide the Polisario with military assistance to keep some
pressure on Morocco, but the Front does not have the capability
to gain a military victory alone. Algiers has been unwilling to
commit its resources to support the Polisario, believing that
doing so risks conflict with Morocco. Algeria views US military
assistance to Morocco as further com licating the military
balance in the Sahara. 25X1
Status of the War
The Algerians view extensions of the Moroccan defensive berm
as evidence that Morocco is pursuing a military solution to the
Western Sahara conflict. The berm has effectively denied the
Polisario access to key population centers. In addition, the
Polisario must travel through Mauritania to enter all but a small
portion of Western Sahara. Part of the berm now comes to within
approximately 15 kilometers of the Algerian border.
Polisario forces have carried out two major attacks--in
October at Zaag and in January at Mahbes--since last fall, but
harassing attacks are frequent. In both major attacks, armor
equipped Polisario forces temporarily breached the berm but were
repulsed by Moroccan reinforcements. The highlight of the
January operation was the downing of a Moroccan Air Force F-1
with a surface-to-air missile fired from Algerian territory.
Placement of the berm so close to the Algerian border makes
Moroccan troops in Western Sahara vulnerable to Polisario attacks
launched from Algerian terrority by reducing the reaction time,
making the possibility of clashes with Polisario forces more
likely. This leaves Rabat the option either of facing routine
Polisario harassment or engaging in hot pursuit into Algeria,
risking clashes with Algerian forces. The Moroccan armed forces
probably will limit the use of their dwindling air assets, which
are increasingly beset with general maintenance problems and
malfunctioning avionics, in future operations near the Algerian
border to avoid a repetition of the January incident.
Outlook
We believe that Algeria will continue to express support for
a solution to the fighting in `,~Testern Sahara, but it will persist
in its efforts to expand international recognition of the
Polisario. Bendjedid is likely to present Algiers' latest Sahara
peace proposal to US officials and ask that they press Hassan to
compromise. In our opinion, the popularity in Morocco of
retaining the territory limits Hassan's ability to compromise.
Although we believe that both Algiers and Rabat desire a
political solution, periods of increased tension are likely to
occur, increasing the danger of direct confrontation. Morocco
will probably continue its long-term strategy of walling in the
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Morocco
North
Atlantic Ocean
Algeria
Mali
DERIVATIVE CL BV OADR
DECL Oa BB404
DERIVED FROM Multiple
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Western Sahara by extending the berm south toward nakhla, which
will be especially irritating to the Algerians.
Elsewhere in the region, Algeria will try to block Qadhafi's
troublemaking in the region by continuing good relations with
Tunisia and *~auritania. Algiers would like to see the demise of
the Moroccan-Libyan union. The Algerians also may consider
providing support to Qadhafi's opposition.
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Cenhai Intdltgrnce AgFnry
aczowa
DIRECTORATE OF INTELLIGENCE
1 Apri1~1985
ALGERIA COOLS ITS TIES WITA THE SOVIET UNION
Bendjedid's desire for better relations with Washington have
been accompanied by a cooling of ties between Algeria and the
Soviet Union. Principal factors in this change are a shift in
Algeria's ideological perspective and an interest in diversifying
its sources of military arms. Bendjedid will point out, however,
? that he cannot abandon Algeria's longstanding ties with Moscow.
Algeria will continue to require access to sophisticated
Soviet-made military equipment and must ensure the continuation
of Soviet resupply and maintenance assistance. Moreover, Algiers
cannot appear too pro-West if it is to maintain its credentials
as a major actor among Third World and nonaligned governments.'
Easing Away from Moscow
? Limiting the influence of the two superpowers in North
African politics has been one of Bendjedid's major foreign policy
objectives. Bendjedid and his advisers often comment that
Algeria will never become a client state of any power after
having paid so heavily for independence. In our view, the
Bendjedid government has made clear to Moscow that its version of
nonalignment includes improved relations with Western Europe and
the United States. In support of its policy of nonalignment,
Algiers continues to refuse Moscow's requests to establish
.permanent basing rights or hold joint military exercises and has
reduced the number of Soviet advisers over the past five years
from a high of 2,500 to 1,200. According to the US Embassy in
s memor um was prepared by the Maghreb Branch,
Arab-Israeli Division, Office of Near Eastern and South Asian Analysis. Information
as of 1 April 1985 was used in preparation of this paper. Coa?nents and queries are
welcaae and should be addressed to Chief, Arab-Israeli Division,
NE:SA M~ 85-10051
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Algiers, Algiers has also made clear that it does not want direct
Soviet military involvement in the Tnlestern Sahara conflict.
25X1
An important factor in Algiers' moving away from Moscow has
been widespread dissatisf action with the quality of Soviet
military assistance and the desire to reduce Algeria's dependence
on a single military supplier. According to the OS Embassy in
Algiers, the government also believes that the Soviet models for
economic development have failed to meet Algeria's needs. The
emphasis on heavy industry had caused the development_of such
sectors as agriculture and light industry to languish. Moreover,
the old system of centralized control over state corporations had'
produced a cumbersome and inefficient bureaucracy. The
combination of these factors has prompted Algiers to look to the
West for technical and financial assistance.-
Bendjedid also .has personal reasons for curbing Algeria's
close identification with Moscow. Bendjedid almost certainly has
not forgotten Moscow's efforts to swing the 1979 presidential
election in favor of a pro-Soviet FLN leader to succeed President
Boumediene. Bendjedid's consolidation of power during his first
term as President included the careful weeding out of many
pro-Soviet holdovers to weaken Moscow's abilit to influence
Algeria's decisionmaking process. 25X1
Algiers also is suspicious of Libya's ties with the Soviet
Union. The US~Embassy in Algiers reports that the Algerians were
extremely troubled by Qadhafi's public threat last year to grant
Moscow access to Libya's military facilities. Algiers probably
views the union between Libya and Morocco as providing an
opportunity for the Soviets to improve relations with Rabat.
Algiers almost certainly would view any attempt by the Soviets to
sell more sophisticated weapons to Libya or supply military
equipment to Morocco as threatening regional stability and
undermining .Algeria's desire for regional leadership.
These negative aspects of the relationship should not mask 25X1
the fact that the Bendjedid regime works with Moscow in a number
of areas:
-- Algeria continues to grant the Soviet Union access and
transit rights to its ports on a case-by-case basis and
allows Soviet overflights into sub-Saharan Africa.
-- Algiers continues to send students and some military
personnel to the Soviet Union for training and education
and participates in such Soviet-sponsored activities as
the Afro-Asian People's Solidarity Organization and
Moscow's annual International Youth Conference.
-- Low-level Soviet-Algerian exchanges take place in any
given year to sign cooperation agreements and discuss
bilateral issues.
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-- Soviets participate in some Algerian development projects,
such as building.a steel plant in Jijel and parts of the
gas pipeline to Hassi R'Mel, and have nearly 5,500
economic technicians in Algeria, although Algiers
restricts their access to the local population.
-- Algeria's voting pattern in the IInited Nations often 25X1
mirrors that of Moscow, but this reflects Algiers'
nonaligned orientation rather than support for the Soviet
IInion. The 13endjedid government did surprise most IIN
observers, however, by abstaining on the iJN resolution
condeming the Soviet invasion of Afghanistan.
Continued cooperation.in these areas supports Algiers' 25X1
commitment to nonalignment. More importantly, Algeria wants to
preserve the option to buy sophisticated military equipment. The
Algerians realize that a sudden and complete shift to Western
military suppliers could result in the loss of Soviet
maintenance, equipment, and spare parts. This would reduce
dramatically Algeria's military capabilities--a,keY factor in
Algeria's pretensions to regional leadership.
Outlook 25X1
Algiers will be cautious not to alienate Moscow or
jeopardize the Soviet arms flow as it expands ties to .the West,
particularly the IInited States. Algeria almost certainly will
continue to grant Soviet air and naval forces lia-ited transit and
port visits as well as overflight privileges. Algerians also
will refrain publicly from criticizing Soviet policies that they
believe are outside Algeria's interests, such as Soviet support
for Nicaragua or increasing Soviet involvement in Syria. At the
same time, 3endjedid is unlikely to approve longstanding Soviet
requests for military base rights or to sign a friendship treaty
with Moscow, which would be viewed by the current regime as
Nevertheless, Moscow is concerned about 3endjedid's turn
toward the West. The Soviets have been trying to prevent a
further erosion in relations with Algeria through a series of
high-level visits from Moscow over the last seven months. They
probably will urge Bendjedid to visit Moscow after his trip to
Washington. They are not likely to initiate a break or even cool
Relations between Algiers and Moscow, however, will continue
to be strained. Moscow probably recognizes that Algeria will be
dependent on Soviet arms for the near future and--under present
circumstances--is unlikely to offer more lenient terms for
military and economic assistance. Algiers has already
experienced stringent Soviet repayment schedules and insistence
that repayment be in hard currency and not oil. The Soviets may
calculate that as the price of oil declines and as Algeria's oil
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supply diminishes over the next 10 years, Soviet terms will
remain more attractive than the Tnlest's. I# Algiers buys _
sophisticated military equipment, such as fighter aircraft, from
the West,_Moscow may ease repayment terms to curb such
purc'~ases.
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25X1
Crntd Intdllga,ae agrncy
DIRECTORATE OF INTELLIGENCE
1 April 1985
ALGERIA AND WESTERN EIIROPE: SHARING OFF BAD MEMORIES
In his meetings with QS officials Bendjedid is likely to
point to closer ties with Western Europe as evidence of the
sincerity of Algeria's more moderate foreign policy. Last year,
Bendjedid made his first visits to Paris, Rome, and Brussels to'
underscore Algeria's commitment to a constructive dialogue on
subjects of mutual interest in Western Europe and the Middle
East. In turn, Bendjedid wants ,expanded economic benefits,
military equipment and training, and West European support of
Algerian leadership in the Maghreb.
The benefits Algiers derives from its ties with the
Europeans. could affect Algerian-IIS relations. Of particular
concern will be the extent to which the Europeans support
Algerian efforts to reduce its dependence on Moscow for military
equipment. The issue of IIS purchases of Algerian gas also might
become more prominent if Algiers encounters difficulties in
lining up European customers.
Several factors have inhibited Algeria from expanding its
relations with Western Europe--its largest trading
partner--beyond strictly economic matters. Algeria's socialist
and traditionally pro-Soviet orientation has made it difficult
for both sides to cooperate on political and international
issues. Algerians have been deeply suspicious of Western
Europe's intentions along the North African littoral,
particularly under the NATO security arrangements. Most
Algerians also view their northern Mediterranean neighbors in the
This memor um was prepared by of the Maghreb Branch,
Arab-Israeli Division, Office of Near Eastern and South Asian Analysis. Information
as of 1 April 1985 was used in preparation of_this paper. Comments and queries are
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context of Algeria's bitter struggle against the French to gain
independence.
Algeria's Socialist Comrades
Algeria's efforts to improve relations have been facilitated
by the increased political clout of European socialists. The
rise of socialism has influenced some European countries to adopt
what Algiers views as a more acceptable position on such issues
as the Polisario Front and Palestinian problems and superpower
dominance in Africa and the.Mediterranean. Embassy reporting
suggests that in some cases, Algiers has used party channels to
promote closer cooperation or to obtain more favorable terms in
private-sector trade agreements.
A key development in Algiers' rapprochement with Western
Europe was the election in 1981 of a socialist government in
France. President Mitterrand's visit to Algiers shortly
~thereaf ter--the second visit of a French President since Algeria
gained independence in 1962--was viewed by both countries as the
beginning of more active Franco-Algerian cooperation. Subsequent
visits by senior French officials and Bendjedid's visit to Paris.
in 1983 also served to strengthen the relationship.
Algiers--well aware of Mitterrand's opposition to Algerian
independence in the 1950s--has been particularly pleased by his
. willingness to keep almost a million Algerian workers in France
-and his return of Algerian colonial archives.. Paris also has,
continued to pay premium prices for Algerian gas and recently
concluded a $1.9 billion contract for an updated air defense
system. Although the French Government has avoided taking a
stand on the Western Sahara conflict, the French Socialist Party
has endorsed self-determination for the Saharan peoples.
3endjedid also_is pursuing closer ties with the socialist 25X1
government in Swain. The resolution last month of the
three-year-old c s ute over a liquified natural gas contract and
Gonzalez's visit to Algiers in March mark the beginning of a new
stage in Algerian-Spanish relations. Madrid is especially
interested in obtaining economic benefits to compensate for the
high price it has agreed to pay for Algerian gas. Algiers, for
its part, wants Spanish support for the Polisario and a balancing
of Madrid's ties with Rabat. The Algerians also are interested
in military cooperation.
Algiers wasted little time after the election of Greek
Socialist leader Andreas Papandreou in exploring areas of closer
cooperation. The Greeks renewed improved relations with Algiers
as a means to establish Athens as a link between Western Europe
and the Arab world. Papandreou visited Algiers in 1982 to kick
off the close relationship and several commercial and scientific
agreements have been signed since then.
Relations between Ital and Algeria have revolved mainly
around gas sales and opera ing the pipeline that links the two
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countries. As with other West European countries, Algiers'
insistence on separate economic assistance packages to accompany
its gas contracts has been a contentious issue between Italy and
Algeria. Discussions on regional issues during a recent visit by
the Italian Foreign Minister suggest that Algiers might look to
Rome, which maintains good relations with Libya and Tunisia, for
support in thwarting Libyan troublemaking in Tunisia after the
death of Tunisian President 3ourguiba.
What Can Be Expected
Algeria may encounter significant obstacles in its pursuit
of closer relations with Western Europe. Algiers' insistence on
high prices for its gas--unless accompanied by concessions on
volumes to be purchased--will hamper economic cooperation with
potential customers. Relations with France could nosedive if
Algiers detects signs of French paternalism toward its former
colony, if Paris adopts a more hardline policy toward Algerian
immigrant workers, and if the French do not maintain what Algeria
perceives as balanced relations with other North African states,
particularly Morocco and Libya. Spain also wants good relations
with Morocco and Libya and is still suspicious of Algerian
support for the separatist movement in the Spanish-governed
Canary Islands. Relations with the IInited Kingdom are unlikely
to move beyond that of cordial business partners as long as a
conservative government is in control in London.
Algeria's press and official spokesmen undoubtedly will
continue to criticize the West on many issues. Moreover, Algiers
wilt remain a tough but pragmatic negotiator in concluding
commercial agreements, trying to link trade with European
endorsement of such political issues as North-South cooperation,
nonalignment, Palestinian and Polisario self-determination, and
reducing superpower influence in the region.
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'?_-
I
I~! ~~
,{.~
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25X1
crnaal Incdltgerue Agency
DIRECTORATE OF INTELLIGENCE
1 April 1985
ALGERIA: THE SEARCH FOR ARMS
High on President Bendjedid's agenda during his visit to
Washington.is purchases of IIS military equipment and
technology. Algiers during the past several years has indicated
its desire to diversify its source of arms from predominantly
Warsaw Pact suppliers. With. the exception of construction
services and a small amount of training, the only major systems
obtained from the West have been 17 C-130 aircraft from the
IInited States and two logistics landin craft and six fast patrol
boats from the IInited Kingdom. 25X1
Algiers is looking to the IInited States for maintaining and
upgrading its current inventory of aircraft. Algiers views its
Air Force as the first line of_defense against an_attack from its
two principal external threats, Morocco and Libya, and wants to
maximize the advantage in performance capability--particular],y
avionics--of its equipment. We believe, over the longer term,
the Algerians want i4estern assistance in establishing an
indigenous capability for producing_small arms and other
relatively unsophisticated materiel. For those items it cannot
produce domestically, Algiers wants to be able to buy from a
variety of sources, Western as well as Soviet. To date, the
Algerians have obtained.or are negotiating assistance agreements
with the IInited Kingdom, France, and West Germany as well as the
s memor um was prepay y t'~e Maghreb Branch, Arab-
Israeli Division, Office of Near Eastern and South Asian Analysis. Information as
of 1 April 1985 was used in preparation of this paper. Ca~anents and eries are
weloane and should be addressed to Chief, Arab-Israeli~Division, 25X1
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Secret
Algeria: Military Deliveries, 1980-84
Million US $
1,400
?U
it
d S
n
e
tates
1,300
?
Other Non-Communist
1,200
?
Communist
1,100
1,000
900
800
700
600
500
400
300
200
100
0
~~ Primarily from the USSR.
n l3stimated.
t
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The Soviet Role
Moscow has been Algeria's primary supplier since
independence and has provided more than 80 percent of Algerian
military needs valued at approximately $5 billion. According to
Embassy reporting, the most recent agreement, signed in 1980,
provides for delivery of $3 billion in equipment and spare
parts. Recent deliveries of equipment under this contract
include the SA-8 surface-to-air missile system at least 60
improved versions of the T-72 tank, four SSN-3-C coastal defense
missile systems and an antitank guided missile system.
For Algiers, however, Moscow's .generosity has had its
drawbacks. Complaints have focused on the poor quality of
equipment provided, what Moscow charges for the equipment, and
difficulties in obtaining spare parts and warranty maintenance.
What Algiers Wants from Washington
The Air Force is particularly
interested in acquiring communications and electronic
countermeasures for the L1011 presidential aircraft, tactical
training for C-130 crews, a variety of pilot and maintenance
training programs, and assistance in maintaining and upgrading
Algeria's Soviet-supplied fighter aircraft. Algiers also is
involved in negotiations with US firms for the acquisition or
production of 1,000 6x6 armored vehicles, various improvements to
Soviet-built T-54/55 tanks, and the supply of 2,500 general
purpose wheeled vehicles over the next five years.
Algiers Also Looking Elsewhere 25X1
Algiers is not looking exclusively to.Washington to end its
dependence on Moscow for military materiel. The Algerians have
been negotiating with the French for both equipment and
assistance in developing a domestic arms industry. The French
press claims that France may have signed its largest contract yet
with Algeria for air defense equipment for $1.9 billion. In
addition, Algiers is looking~to the French for aircraft,
submarines, fast patrol boats, minehunters, and an. early warning
radar system. 25X1
British military assistance has been primarily with the
Algerian Navy, and Algiers,. is interested in British submarines, a
frigate, and landing ships. London also wants to promote the
Hawk as a replacement aircraft for Algeria's aging MIG=15 and
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Algerian interest in ~Aest German assistance dates back to
1981 and focuses on training and coproduction, probably in
Algeria, of a,wide range of armaments including armored vehicles
and artillery. Algiers also is interested in mass producing the
73mm HEAT/HEAP infant rocket system domestically with German
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Cenaal Inteiltgrnce agency
DIRECTORATE OF INTELLIGENCE
1 April 1985
THE ALGERIAN ECONOMY: HANDLING THE OIL SLIIMP
Algeria has weathered the soft oil market through a
combination of good economic management and a drawdown of foreign
exchange reserves. IInlike many other Third World oil producers,
Algiers has maintained a strong international credit rating which 25X1
should allow sufficient financial leeway to complete most aspects
of the current development plan.
Self-imposed financial cutbacks have had a significant
impact on urban consumers. Trade figures show that imports of
consumer goods are down 50 percent from the 1982 level, and
social spending has been sharply curtailed. The QS Embassy
reports that unemployment and underemployment in the increasingly
youthful and well-educated population probably top 20 percent in
urban areas. Algeria's pervasive security forces and the limited
expectations of most Algerians have helped control discontent
over social and economic conditions so far. Continued austerity,
however, will increase the likelihood of unrest.
The Economy 25X1
Petroleum continues to be the mainstay of Algeria's
economy. Hydrocarbons account for nearly all export earnings, 30
percent of GDP, and 60 percent of government revenues. Algeria
has been a world leader in developing and marketing its large gas
reserves. Algiers realizes that it will have to rely
increasingly on gas
s memor _ um was prepared by the Maghreb Branch, Arab-
Israeli Division, Office of Near Eastern and South Asian Analysis. Information as
of 1 April 1985 was used in preparation of this paper. Comments and eries are .
weloane and should be addressed to Chief, Arab-Israeli Division, 25X1
NESP, M~ 85-10051
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exports for foreign exchange. Local oil industry statistics
indicate that crude oil production peaked in 1978.
World Bank figures show that agriculture employs 30 percent
of the Algerian labor force but provides only 6.5 percent of
GDP. Agricultural production has stagnated during the past two
decades while the population has rapidly increased, forcing the
government to import as much as 50 percent of food needs.
Several factors are responsible for the stagnation:
-- Significant shortfalls in the use of investment funds
allocated to agriculture, resulting in insufficient
replacement of equipment, inadequate development of water
resources,.and serious deterioration of irrigation
structures.
-- A government policy of subsidized food prices that has
made agricultural activity unprofitable.
-- A decline in the agricultural labor force spurred on by
wage policies that favor urban workers.
-- An overly cumbersome.,centralization of agricultural
planning, investment, and marketing systems and lack of
coordination within the government in carrying. out these
.functions.
The IIS Embassy in Algiers reports that industrial
development has consumed the lion's share of the country's
financial resources--nearly 40 percent of GDP over the past 10
years. Even so, Algeria's efforts to diversify the economy have
.had only limited returns--heavy industry, excluding petroleum
accounts for only 15 percent of GDP. Since Bendjedid came to
power in 1979, Algeria has reoriented its development policy to
pay more attention to agriculture and the needs of the burgeoning
population--50 percent is under 18 nears old--which is growing by
3 percent annually.
A New Game Plan
Algeria has just embarked on its 1985-89 development plan.
This plan-emphasizes development of agriculture and water
resources. The plan also reveals Bendjedid's growing preference
for decentralizing..the public sector and greater reliance on
private initiative. The evolution toward a market-oriented
economy, however, will be tightly controlled by the government,
particularly in priority areas of ,the economy such as
hydrocarbons and heavy industry.
The vicissitudes of the oil market will be a primary factor
affecting Algeria's economy and the government's ability to meet
development goals. The IIS Embassy reports that sharply lower
petroleum revenue projections already have been incorporated in
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Algeria: Investment Spending, by Sector
a Proposed.
bExpenditure allocated to completing projects started under the previous plan.
Unclassified
Algeria: Origin of GDP, 1984
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the national budget and the development plan. Algeria's
excellent credit rating, despite one of the largest debt burdens
of any OPEC country, should allow the government to meet foreign
borrowing needs through 1989, in our opinion.
Algiers will try to minimize its international loan
requirements by continuing its hardline policy on crude oil and
gas prices. We anticipate that the Algerians will support high
prices by reducing deliveries. Problems with gas production--
more complex reservoir structures than anticipated and time
delays in installation of necessary secondary recovery equipment
--are likely to hold export capacity below contract volumes in
any case. Algiers is likely to be more flexible on sales of
noncrude petroleum liquids such as condensate to help maintain
export revenues. Sales of condensate, natural gas liquids, and
refined products are not controlled by Algiers OPEC quota of
660,000 b/d of crude oil.
Outlook: Continued De endence on Hydrocarbons
Algeria's economy and foreign trade position will continue
to be determined by the international oil market through the rest
of the 1980s. ..Hydrocarbon exports this year are not expected to
exceed the 940,000 b/d level achieved in 1984--a level that
includes about 300,000 b/d of oil equivalents. Overall export
receipts of $12.4 billion will show no growth this year. Even
assuming no increase in the already reduced cost of imports, we
project a $2.6 billion current account deficit for 1985. Real
GDP growth has averaged 4 percent annually since 1979--well below
the 7.3 percent average .over the previous five years--because of
the weak foreign trade position and is not likely to exceed 5
percent in 1985, according to the OS Embassy.
Implications for the IInited States
Algeria's economy is the strongest in North Africa, despite
financial constraints, and offers many opportunities for
increased IIS participation. Algeria has provided a $500 million
market for II5 agricultural goods, heavy machinery, and transport
equipment since 1979 and had a $3 billion trade surplus with the
IInited States in 1984. IIS companies will have to overcome stiff
coanpetition from Algeria's European trade partners--particularly
the French--to gain a larger share of the market. Financing will
be a key element in major contract negotiations. Petroleum
barter deals may be offered as payment. In addition, Algiers may
look for concessions on gas negotiations with Washington as a
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0
Algeria: Balance of Payments
~3i11ion $
1980
1981
1982 1983
1984a
1985b
Current Account 3alance
1.6
-1.8
-1.9 -1.7
-2.3
-2.6
Trade Balance
5.6
2.4
2.2 2.7
2.4
2.4
Exports (f.o.b.)
15.9
13.5
12.7 12.5
12.6
12.4
petroleum and products
14.9
12.3
10.7 9.4
9.6
9.4
Gas
1.0
1.2
2.0 3:1
2.6
3.0
Imports (f. o, b.)
10.3
11.0
10.5 9.8
10.2
10.0
Foodstuffs
2.1
2.2
2.0 1.8
I.8
1.7
Semimanufactured goods
4.4
4.2
4.1 3.7
3.9
3.9
Capital goods
2.8
4.0
3.4 3.8
3.9 .
3.9
Consumer goods
1.0
0.6
1.0 0.5
.5
0.5
Net Services
-3.9
-4.1
-4.0 -4.2
-4.5
-4.9
Freight and insurance
-1.2
-1.3
-1.3 -1.2
-1.2
-1.2
Investment insane
0.7
0.8
0.6 0.5
0.4
0.4
Other
-3.3
-3.6
-3.3 -3.5
-3.7
-4.1
Grants
-0.1
-0.1
-0.1 -0.1
-0.1
-0.1
Capital Account Balance
-0.5
1.7
0.6 1.2
1.9
2.4
Changes in Reserves
1.1
-0.1
-1.3 -0.5
-0.4
-0.2
a Estimated
b Projected; assumes petroleum exports of 939,000 bd at an
average price of $27.50 per barrel.
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~i~CP~Y
AlgePio: BDfieecteon of 7Crode, Il975-~4
too
United States
90
~ France
80
~ Other European
70
countries
ti0
-"-
~ USSR
SO
I
~ Other
40
_
- -
Exports
30
-
Imports
20
i
10
-
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Central InMligence Agenry
DIRECTORATE OF INTELLIGENCE
1 April 1985
ALGERIAN NATURAL GAS
Algeria has the potential to be a significant supplier of
natural ,gas to Western Europe in the 1990s. In the past,
however, Algiers has taken a hardline stance on pricing, even
when confronted with a weak market. As a result, gas purchasers
probably will be less willing to sign new contracts for Algerian
gas to meet expected demand, opening new opportunities for the
Soviet Union to.capture any growth in import demand in the
Algerian gas reserves are the fifth largest in the .world.
Its ability to sell liquefied natural gas (LNG) is limited,
however, by its pricing demands which make Algerian LNG 30
percent more costly than Soviet gas. Only gas sold to Italy via
the Trans-Mediterranean Pipeline is competitively priced in the
current surplus market. Partly as a result of its pricing
policy, Algiers has not been exporting alI of the gas originally
called for in its contracts:
-- Contract commitments to France, Italy, Belgium, and Spain
are about 29 billion cubic meters (bcm) annually.
Algeria, however, currently is supplying only about 19 bcm
to these consumers. This represents less than 10 percent
of West European gas consumption. Algeria recently
resolved a pricing dispute with Spain and is completing
the second phase of its export pipeline system to allow it
to cover its full contract commitments to Italy.
s memorandum was Prepared by the Energy Markets Branch,
Strategic Resources Division, Office of Global Issues. Information as of 1 April
1985 was used in preparation.. of this paper. Comients and queries are welcane and
should be addressed to Chief, Arab-Israeli Division,
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Algerian Gasfields and Facilities
I Sardinia
f (Italy)
~ize ~a
ALGIEN .~02.?V ~'_~Sittkd ~ ~ ''""
y1 1 KABYL~ ~oeataatine _ns?
I/ ~ Ouarpl ~~\
~ i \\
~ ~.\~
r,~ur~..,~r.^,,. ~, r,rr.. 1~i~~~c
C~ Gasfield
-Gas pipeline
c~ LNG plant
Mali
Niger
L ~ ... ~. 0 300
ll Kilometers
904580 3 85
"~URE$li
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-- Algeria had at one time as much as 30 bcm in contract
commitments to the United States which would have given
Algiers about 5 percent of the US market. These
contracts, however, have been reduced to around 5.9 bcm,
with 4.5 bcm of that in a currently suspended contract
with Trunkline.
Algeria has attempted to avoid buyer objections over pricing
policies by,negotiating export contracts directly with consumer
governments. These deals are at times part of a larger trade
.package but require government subsidies to state-owned utilities
which purchase the gas. 25X1
We believe Algiers'- inf lexible pricing policy has been in
large part determined by production considerations which limit
the amount of gas available to meet supply commitments during the
rest of this decade. Unanticipated production problems in
existing fields, delays in developing new gasfields, and
continuing poor operational performance of LNG plants are
limiting output. Algiers has considered several alternatives to
overcome these problems--such as decreasing gas injection and
.accelerating development of southern gasfields--but most are too
costly or politically undesirable and could not be implemented in
time to prevent the sizable shortfall in exports we expect.
Algeria is likely to implement several minor measures such as
slowing growth of local gas consumption and initiating limited
development of new gasfields. Such measures would allow Algiers
to export between 20-25 bcm annually through the early 1990s,
still short of its contract commitments to Western Europe. 25X1
By the mid-1990s, after new gasfields come on line and the
production capabilities of existing fields are restored, Algiers
should be able to meet its existing commitments and perhaps have
an additional 40-45 bcm per year available for export., Despite
industry forecasts of an increase in gas import demand, however,
we believe most European customers will be inclined to forgo
additional volumes of Algerian gas because of concern over
Algeria's pricing policies and its reliability as a supplier.
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Central Intdlig~ence Agency
DIRECTORATE OF INTELLIGENCE
1 April 1985
ALGERIA'S NIICLEAR PROGRAM AND PROSPECTS
In May 1981 Algeria adopted a nuclear energy program to
provide 10 percent of Algeria's electrical energy needs by the
year 2000. The Commissariat aux Energies Nouvelles (CEN) was
established in 1983 to supervise nuclear and nonfossil fuel
research and development. The only nuclear facilities in Algeria
are three accelerators for high-energy research, which they have
had for several years. Algerian students can study nuclear
science at the Oniversity of Algiers or abroad and are generally
supported by state scholarships. 25X1
Algerian Nuclear Ambitions
Algeria has nuclear cooperation agreements with France and
Belgium.to exploit significant uranium resources in southern
Algeria, to establish a nuclear energy grid, and to develop an
indigenous nuclear technology. Algeria signed a scientific and
technical cooperation agreement with Argentina in 1983 and
concluded a similar agreement last month for energy cooperation.
We believe both agreements provide a framework for future nuclear
cooperation. Last fall Argentina agreed in principle to provide 25X1
training in nuclear technology and perhaps a natural uranium-
fueled research reactor which could take. advantage of Algeria's
Algeria has attempted to obtain French, IIS, Canadian, and
Argentine assistance in building and supplying a research
facility that would include at least three additional research
reactors, according to Embassy reporting. Discussions with the
s memorandum was prepared by of the Issues Branch, South
Asia Division, Office of Near Eastern and South Asian Analysis. Information as of 1
April 1985 was used in preparation of this paper. Caaments and queries are welcome
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French, however, have stalled over financial considerations,
while negotiations with the IInited States and Canada are bogged
down over the issue of safeguards.
Nuclear Nonproliferation
Algeria has refused to sign the Nuclear Nonproliferation
Treaty. The Algerians view the treaty as discriminating against
states just setting out on nuclear development programs by
forcing them to abstain from activities that nuclear weapons 25X1
states already are free to pursue. Furthermore,.Algiers believes
the treaty compromises national sovereignty by forcing a nation
to open all nuclear facilities to foreign inspection.
Algerian officials have indicated to the US officials that
they have no intention of conducting unsafeguarded nuclear
activities and will accept IAEA safeguards on any nuclear
facilities they develop. Algiers prefers, however, to negotiate
safeguard agreements on a case-by-case basis rather than make a
blanket commitment in advance.
Current Negotiations
Progress has been slow and deliberate on Algeria's nuclear
program. Algiers will continue discussions with Western
suppliers and others, but it probably views current discussions
with Argentina?as the most promising. Apart from China,
Argentina has the most advanced nuclear program in the Third
World and could supply Algeria with significant technology and
facilities. Nuclear cooperation with Buenos Aires probably also
is attractive as Argentina is not a signatory to the
Nonproliferation Treaty and may not insist on safeguards.
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Central Intdti~erxe Ag~enry
DIRECTORATE OF INTELLIGENCE
1 April 1985
POLITICAL DYNAMICS OF ALGERIA
President Bendjedid has brought about a gradual,shif t in the
direction of Algeria's domestic and foreign policies. The
radical, pro-Soviet ideologues who dominated Algerian politics
during the first 20 years of independence have been replaced and
their strident anti-US rhetoric and policies modified in favor of
a more genuine nonalignment. Under Bendjedid's leadership, the
country has moved increasingly toward the West, principally to
obtain technology and arms, but also to redress the past tilt
toward the Soviet Union. Bendjedid has made it clear in his
actions and public statements that his policies are geared more 25X1
toward fulfilling contemporary Algerian expectations and solving
Algeria's immediate economic and social problems than tr i~ ng to
apply socialist precepts that have been found wanting.
The Leadership
The Algerian ruling elite is an interlocking network of men
with close personal ties.. and common values derived from their
revolutionary experience. Bendjedid and his key advisers--
military officers, some prominent figures from the past, and an
ascendant group of educated technocrats--are staunch nationalists
and often claim they are "Algeria-firsters." In contrast with
the dogmatic, pro-Soviet cast of previous regimes, the current.
leadership is pragmatic, and most are Western in their outlook, 25X1
tastes, and style.
s msaor um was prepared by the Maghreb Branch,
Arab-Israeli Division, Office of Near Eastern and South Asian Analysis. infoanation
as of 1 April 1985 was used in preparation of this paper. Ca~anents and queries are
MESA M~ 85-10051
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25X1
Bendjedid's ability to move Algeria along a more moderate
path should not obscure the fact that a number of. influential
leftist ideologues and political radicals remain in Algeria's
sole political party, the National Liberation Front (FLN), and
pose a potential for opposition. Pro-Soviet sentiments almost
certainly exist at the lower levels of the party, the bureaucracy,
and the military. Bendjedid, however, is particularly skilled at
co-opting these men and in some cases has shuffled their positions
to remove them from their political power base. Others may
realize that to get ahead, in the Bendjedid regime, they must 25X1
modify their attitudes.
Institutionally, decisionmaking in Algeria is highly
centralized, but in practice, Bendjedid seldom exercises the full
prerogatives of his office without consultation. We believe he
seeks first and foremost the approval of the military. Not only
is the military Bendjedid's principal power base, it also is the
only source of power that could effectively challenge a
presidential initiative. Military officers hold eight of the 30'
Cabinet portfolios and 26 percent of the FLN membership.
The Regime, the Public, and the Opposition 25X1
Most Algerians probably would give Bendjedid high marks for
his performance and his efforts to rebuild national pride.
Bendjedid's anticorruption campaigns--also a means to eliminate
his rivals--have been well received by the public, which all. too
often views the regime's primary goal as self-aggrandizement.
Bendjedid's efforts to steer Algeria back into the Arab
mainstream have enhanced his image at home as an Arab statesman.
Similarly, there has been widespread support for Algeria's
improved reputation resulting from Bendjedid's role in
negotiating the release of QS hostages from Iran, acceptance of
Palestinians after the PLO expulsion from Beirut in'1982, and his
efforts to mediate the Iran-Iraq war. 25X1
Despite Bendjedid's political strength, several issues could
crack the current government policy consensus or increase popular
criticism of the government. Of particular concern is disaffection
among students, workers, and Islamic fundamentalists. So far, the
regime has had considerable success in controlling dissent by a
mixture of accommodation and suppression and by clearly limiting
government tolerance of criticism. A loyal and efficient security
service monitors dissidents and resorts to force in those instances
Fundamentalism. The spread of Islamic fundamentalism in
Alger a s be ng monitored very closely by the government. The
regime has not forgotten a series of violent, fundamentalist-
inspired demonstrations in Algiers in 1982. ...Fundamentalist
appeal is focused on the urban working class, students, and rural
poor. The regime maintains tight control over the national
religious establishment to minimize the chances that the regime's
Islamic credentials--a cornerstone of its right to govern--are
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not seriously challenged. Moreover, the government's crackdown
after the 1982 disturbances has kept the fundamentalist groups in
Algeria small, fluid, and poorly organized, and the do not pose
a significant threat to the regime. 25X1
Economic Problems. Algeria faces social and economic
problems sim lar to those of most developing Third World nations
--rising unemployment, a burgeoning population (50 percent are
under.l8 years old), and an inadequate supply of consumer
goods. Strikes among students and workers occur periodically,
and gangs of .idle youth roam the streets of major cities,
increasing the possibility for unrest. Police and security
forces have responded quickly and effectively to any
disturbances. More troubling is the impact of dwindling crude
oil revenues and difficulty in marketing natural gas resources--
Algeria's primary source of foreign exchange--on Algiers'
ambitious investment program. The Bendjedid regime is in the
early stages of decentralizing the government bureaucracy and
expanding the private sector in the economy as well as developing
housing programs and other social services. The performance in
these areas will probably determine popular attitudes toward 25X1
Bendjedid's economic management, and any serious misstep is
likely to revive the old arguments over socialism.
Ethnic and Re Tonal Tensions. The Rabyle region in the
mounta ns northeast of Algiers is~ predominantly Berber and has
historically opposed the central government--coups against the
government were led from this region in 1962 and 1967. Periodic
demonstrations among the Berbers arise mostly out of what they
perceive as the government's neglect and second-class treatment
and not from desires for autonomy. Especially controversial has
been the government's Arabization plan--the replacement of French
with Arabic as the national language--which the Berbers see as
undermining their culture and language. The regime generally
tolerates public criticism from the Berbers and has accommodated
some demands by increasing the number of Berbers in the
government and by allowing Berber to be taught at the
university. The Berbers desire, however, to get a bigger piece
of the Algerian ,pie will remain a sorepoint in Algerian society
Western Sahara. Bendjedid's support for a compromise
solut on to the western Sahara dispute could become a contentious
issue among Algerian decisionmakers. Although the Western Sahara
issue is not critical for most Algerians, Bendjedid cannot ignore
those factions in_Algerian political life that advocate support
'for the Polisario. Certain groups in the Algerian military and
the more ideological wing of the FLN would oppose any attempt by
Bendjedid to cut ties with the Polisario. To ensure consensus in
the government, Bendjedid realizes that any negotiated settlement
must contain at least the appearance of guarantees for Saharan
rights.
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Outlook
The prospects for political stability in Algeria are good.
Bendjedid's men are in key posts in the government, the FLN, and
the military. Although some groups in~Algerian society are
disappointed that neither the revolution nor Bendjedid's economic
policies have lived up to expectations, most believe they can
effect changes through the system. Moreover, Bendjedid's
sensitivity to military concerns diminishes the possibility for
serious friction between him and the decisive element in the
Algerian power structure. Finally, the lack of leadership,
funds, and manpower will restrict the opposition's ability to
challenge Bendjedid.
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~,lgeria: Fact Sheet
Dopulation
20,695,000; average annual growth rate 3. 1$; 80$ Arab, 20~
Berber, less than 1$ European
Land
2,460,500 sq km; 80$ desert, waste, or urban; 16$ pasture and
meadows; 3$ cultivated; 1$ forest
Water
Lets of territorial waters (claimed) : 12 nm
Religion
99$ Sunni Muslim; 1$ Christian and Jewish
Language
Arabic official), French, Berber dialects
Literacy
3 5$
Government
Repu .ic; single-party rule under National Liberation Front (FLN)
Legal system
Based on French and Islamic law, with socialist principles
Suffrage
O in versal over age 19
Communists
400 (est); Communist Party illegal (banned 1962)
Gross Domestic Product
2.9 b llion (1982)
Agr i cul tur e
Main crops--wheat, barley, grapes, olives, citrus fruits, dates,
vegetables, industrial crops
Major industries
Petroleum, light industries, natural gas, mining, petrochemical,
electrical
Crude Oil 9roduction
7 0,0.00 in 1985 (OPEC quota 660,000)
Forei n Reserves less old
1.576 b 11 on (Jan 1985)
Major trade partners
~, es ermany, ranee, Italy
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Exchan a rate
5.2 Alger an dinars=$1 (January 1985)
Fiscal Year
Calendar year
Defense Forces
Army 150,000; Navy 6,500; Air Force 12,000 (est 325 pilots);
National Gendarmerie 24, 000. Compulsory two-yr service.
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25X6
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