BOUTEFLIKA SAYS HE'S NOT GOING ANYWHERE

S E C R E T ALGIERS 000001

SIPDIS

SIPDIS

E.O. 12958: DECL: 01/02/2027
TAGS: PREL PINR PGOV ECON KDEM AG
SUBJECT: BOUTEFLIKA SAYS HE'S NOT GOING ANYWHERE


Classified By: Ambassador Robert S. Ford. Reasons 1.4 (b) and (d).

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SUMMARY
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1. (C) In a speech entitled, "Assessments and Perspectives,"
President Bouteflika December 26 surprised the nation by not
outlining his proposed amendments to the constitution which
must be adopted by referendum. Nor did he, as some media had
speculated, reshuffle his cabinet. Instead, Bouteflika
referred to widespread concern about his health and told the
nation at the signing ceremony for the budget for 2007 law
that he's "not going anywhere." He then candidly assessed
the failings of the government. Bouteflika said Algeria
needs more private investment, including foreign investment,
and it needs to integrate into the world economy. He
pointedly noted that Algerian economic growth resulted from
hydrocarbons exports and little else. However, he also
cautioned that the government would not sell out the
country's "strategic" interests in the energy sector or in
privatization; he admitted to having erred when he briefly
opened the energy sector to wider foreign participation in

2005. He also called for strengthening the rule of law and
giving primacy to "transparency and integrity" in economic
policy decisions to achieve "confidence, social peace, and
economic profitability".


2. (C) Bouteflika also displayed some traditional Algerian
paranoia about foreigners. Without naming any group in
particular, he lashed out at international NGOs that work
with Algerian civil society to the detriment of Algerian
interests, and he criticized Algerians who "sneak" into
foreign embassies to supply them with information.
Foreigners, he warned, usually do not work for the interests
of Algeria. He also lashed out at Algerians who gain dual
nationality, calling them shameful. Looking more broadly at
the domestic political ramifications of the speech,
Bouteflika's not moving forward on creating a vice presidency
is giving credence to other stories we are hearing that his
health is such that he will not address the succession issue
any time soon. END SUMMARY.

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INTERNAL REFORM AT THE TOP OF THE AGENDA
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3. (U) Bouteflika said that Algeria would not stop its
support for just causes internationally, but it will not
stand solely in either the West or East. He warned that
Algeria must recognize it could not change the world and that
it needs to address its own specific problems. He stressed
that the government would continue to fight terrorism
resolutely. The official daily Moujahid also emphasized the
President's points about bringing an end to regional
favoratism (a clear reference to long-standing East-West
tensions inside Algeria as well as simmering discontent in
the Kabilye); the success of Algeria's repayment of its
foreign debts as a step towards future prosperity (quoting an
Arabic proverb that a man who pays his debts is on his way to
happiness); and the "stability and serenity" in the country
following years of terrorism and insecurity. El Moujahid and
the rest of the press also widely reported economic
achievements touted by the President. These include the
creation "in recent years" of more that 92,000 new small-and
medium sized enterprises, the doubling of per capita GDP
between 1999 and 2005, and an increase in household
consumption by 45 percent between 1999 and 2004.

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MIXED MESSAGE ON ECONOMIC POLICY
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4. (U) Despite the progress made in these and other areas,
the president made clear --and the press highlighted-- his
dissatisfaction with the pace of reform. Bouteflika
attributed the growth in per capita income in Algeria to
higher world energy prices, not greater production or effort
inside Algeria. He warned that the country must prepare for
the day when oil and gas fields run out by beginning to
diversify the economy now. Bouteflika said that Algeria
needs domestic and foreign investment and to integrate its
economy into the world economy. He cautioned, however, that
Algeria would not "sell out its strategic interests" and
admitted erring when he signed the 2005 hydrocarbon sector
law that had boosted the role of foreign energy companies in
Algeria. He pledged the government would act carefully on
privatization too. He acknowledged the economic crisis many
young Algerians face, particularly unemployment. He said the
government would cut unemployment by using energy revenues
for public works projects to promote rural development, build
decent housing, and construct highways and other
infrastructure.

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OLD ALGERIAN PARANOIA ON DISPLAY AGAIN
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5. (C) Bouteflika also lashed out at alleged interference
for foreigners in Algeria. Without naming any particular
organization, he criticized international non-government
organizations that issue "expert reports" about Algeria, and
he criticized Algerian NGOs that work with them and obtain
financing from them. He warned that the Algerian
government's silence about their activities should be
constructed to mean the Algerian government approves of them.
He also blasted Algerian civil society representatives who
"sneak" into foreign embassies and "salons" who act as agents
of foreign interests. At one point Bouteflika cautioned that
foreigners usually do not work for the interest of Algeria.
Later he shamed Algerian citizens who take a second
nationality for turning their backs on the country that has
raised them after sacrificing "one and a half million
martyrs". Bouteflika applauded Mauritania which he said does
not allow dual nationality for its citizens. (Comment: the
line about the martyrs refers back to the war against the
French. In his discussions about NGOs Bouteflika likely was
referring to Transparency International which got wide press
coverage recently discussing corruption in Algeria. He could
well have had NDI in mind as well. Clearly he does not trust
the interaction between foreign embassies, foreign NGOs and
Algerians. End Comment.)

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REACTIONS: PRAISE FOR DOMESTIC FOCUS
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6. (C) Fatma Zohra Flici, an MP affiliated with the RND
political party (one of three political parties forming the
ruling coalition) praised the president's candor. She said
the underlying message to government ministers was clear.
"There are many problems that have to be addressed, and we
have to tackle these problems directly and take real action."
Amine Echikr, a reporter for the French-language daily
newspaper La Tribune, with a reputation for strong coverage
of economic issues, told us December 26 that there were
"clear moments when we felt that the president wanted to
burst and say aloud, "I can't bear incompetence anymore." He
did not need to go that far because the honesty of his
discourse and the glances at ministers during the speech was
enough to make the ministers feel bad," explained Echikr.


7. (C) Senate President Abdelkader Bensalah told the
Ambassador December 27 that Bouteflika intentionally
highlighted the government's need to focus on domestic
problems, particularly economic, and spend less time on
foreign policy concerns. The candid nature of Bouteflika's
lengthy remarks was intended to shake people up and get their
attention. Bensalah expressed his hope that the
president's address, on the occasion of the signing of the
annual budget, would become an annual tradition.

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NO CONSTITUTIONAL OR CABINET CHANGES
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8. (C) What was not said in the speech came as a surprise.
Bouteflika did not announce, as the press has widely
speculated, a package of constitutional amendments for a
national referendum. RND party MP and director of
communications Miloud Chorfi told us December 26 that perhaps
Bouteflika has moved beyond the idea of a referendum. (Other
political party contacts are starting to say the same thing.)
According to this theory, Bouteflika is now convinced that
calling a referendum, which was widely expected to contain a
provision creating a vice presidency, would showcase his
physical weakness and inability to govern. Bouteflika's
making clear in the speech that he wasn't going anywhere may
mean that the referendum is indefinitely on hold.


9. (S) A relative of Interior Minister Zerhouni claimed to us
December 26 that the Minister, a Bouteflika confidante who
suffers himself from cancer, had counseled the president to
shelve the idea of a referendum indefinitely. A physician at
the Military Hospital in Algiers (protect) familiar with
President Bouteflika's health condition recently told us in
strictest confidence that the president suffered from cancer
-- as had been widely speculated -- but that it was
currently in remission for the foreseeable future, allowing
the president to fulfill his duties.


10. (C) Bouteflika also did not announce any shakeup of his
cabinet, which surprised some in the media. MP Chorfi, who
had to cancel an appointment with us at the last minute
because he had been "ordered" to be in the audience for
Bouteflika's speech before a five-day holiday weekend to
prevent speculation about it. (He said that also explained
why the FLN party -- whose members are under instruction from
FLN party leader and Prime Minister Belkhadem to let the
speech speak for itself -- has not returned our phone calls
seeking comment.) However, added Chorfi it was clear reading
between the lines that Bouteflika would dismiss ministers
whose performance was unsatisfactory, perhaps as early as
January. It is widely speculated that Minister of investment
Temmar and Minister of Energy and Mines Khelil are likely to
leave the cabinet soon. Bouteflika, according to a source in
the office of the Minister of Finance, has come to see both
men as political liabilities because of the public perception
that they are agents of multinational firms and the U.S.
Algerians roar with approval, for example, when Louisa
Hanoune, head of the Socialist Workers' Party, denounces both
men in her speeches.

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COMMENT: PRESIDENT'S HEALTH KEY
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11. (S) If true that President Bouteflika's cancer is in
remission, it would explain the president's confident
assertion that he is not going anywhere -- at least not
anytime soon. The DCM and other diplomats present at an
official lunch in mid-December in honor of the Spanish prime
minister noted that Bouteflika had a healthy appearance. If
Bouteflika's health is stable, pushing for constitutional
changes that would create a vice president to succeed him
does not project an image of strength. This may explain the
shelving -- at least for now -- of any constitutional
reforms. It is also possible that behind the scenes
negotiations on who will succeed Bouteflika have not produced
a candidate acceptable to the military, as the executive
director of the moderate Islamist MSP party told us recently.
Such disagreement would also explain why the referendum
remains on hold. Of course, the two ideas are not mutually
exclusive.
FORD