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Tuesday, July 11, 2006

Algeria politics: Boutef for ever


The Algerian president, Abdelaziz Bouteflika, has implicitly acknowledged his intention to seek a third term in office through announcing plans for a referendum on a new constitution to be held by the end of this year. As had been widely expected, Mr Bouteflika used the occasion of his speech on July 5th to mark the 44th anniversary of Algeria's independence to make the case for constitutional change. He did not spell out the proposed changes in any detail, mentioning only the need to reinforce basic rights and liberties and instil the principle of the separation of powers, as well as to "put an end to the amalgam between a parliamentary and a presidential regime". However, it has become clear in recent months that the main effects of the change will be to enhance the powers of the presidency and to abolish the two-term limit, which would have required Mr Bouteflika to leave office in 2009.

He had paved the way for this initiative at the end of May through installing as prime minister Abdelaziz Belkhadem, the head of the front de liberation nationale (FLN), Algeria's largest political party. Mr Belkhadem has strongly advocated constitutional reform, and an FLN working party has drawn up proposals for a strong presidential system, with no limits on the number of terms to be served, and with the requirement for the president to appoint a deputy to take over in the event of his death or incapacity in office. The outgoing prime minister, Ahmed Ouyahia, who heads a minority political party, had been unenthusiastic about making changes to the constitution--it has long been assumed that Mr Ouyahia saw himself as a leading candidate to become president himself in 2009. Since leaving office, Mr Ouyahia has made a point of declaring his loyalty to Mr Bouteflika, suggesting that he has become resigned to the likelihood that the changes in the constitution will be approved.


The question of Mr Bouteflika's long-term plans has taken on added significance in light of his serious illness in November 2005, which required him to undergo surgery for a haemorrhaged stomach ulcer in a French military hospital. He had resumed his official duties by mid-February, but there are persistent reports that his condition remains precarious. It seems clear that he is determined to hang on to power as long as his health permits, and indeed to have a say in his succession through the selection of a vice-president.


Mr Bouteflika has bolstered his chances of winning strong support for the referendum on the constitution through sanctioning a number of populist economic measures. These have included a US$1.4bn package of wage increases that will benefit some 1.5m public-sector workers--a measure that had been opposed by Mr Ouyahia on the grounds of its potential inflationary impact. In addition, the government plans to cut the corporation tax rate to 25% from 30%, and to amend the controversial hydrocarbons law so as to restore some of the prerogatives of Sonatrach, the state oil and gas company.

National oil

The changes to the hydrocarbons law, which were endorsed by the cabinet on July 4th, reflect the shift in assessments of the role of national oil companies following the sharp increase in the oil price since 2002. The law was conceived by the energy and mines minister, Chakib Khelil, as a means to attract more foreign investment into the oil and gas sector at a time when Sonatrach faced financial constraints owing to the relatively low oil prices that prevailed in the late 1980s and through most of the 1990s. The law was originally drafted in 2001, but was then shelved after it faced stiff political opposition. The president revived the law after his re-election in 2004, and it was passed last year. The law hived off Sonatrach's regulatory functions to two new entities--which have yet to start full operations--and obliged the state energy company to compete for exploration and production contracts on very similar terms to foreign firms. Article 48 of the law gives Sonatrach the option to take a stake in new ventures, but this is limited to 20-30% and must be exercised within 30 days. Under the previous regime a foreign firm had to allow Sonatrach a 51.5% stake in any joint venture. It appears likely that Sonatrach's automatic right to a stake in new upstream ventures is to be restored in the amended law--details have yet to be published.

Intriguingly, the changes to the law follow a recent state visit to Algeria by the Venezuelan president, Hugo Chávez, who has been at the forefront of moves to assert the interests of national energy companies in Latin America, rolling back reforms in which Mr Khelil played an important role in pushing though in his former job at the World Bank.

Source: ViewsWire Middle East
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