Europe’s War-Driven Hunt for Gas Hands Algeria an Election Boost

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(Bloomberg) — Five years after an election that showed Algeria riven by protests and staring down an economic crisis, Europe’s hunt for energy has spurred a sharp reversal of fortunes.

Armed with Africa’s second-biggest natural gas reserves, the OPEC nation has become a vital alternative to Russian supplies, using the windfall revenue to quell domestic dissent while flexing its muscle on the world stage by pushing for peace in the Middle East.

Many Algerians are likely to stay home for Saturday’s election that President Abdelmadjid Tebboune is all but guaranteed to win. But disastrous turnout may pose fresh questions of legitimacy, raising the specter of another wave of unrest on Europe’s doorstep should global energy prices plummet.

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Tebboune needs “to avoid being a lame duck in what is likely to be his last term in power,” said Riccardo Fabiani, North Africa project director at the International Crisis Group. “A weak popular mandate could potentially reinvigorate opposition to the president, either within the security ranks or the broader population.”

Events will be closely watched across the Mediterranean, even if energy flows are typically untouched by any tumult. The likes of France, Spain, Germany and the UK are increasingly reliant on Algerian gas after Russia’s invasion of Ukraine, while Italy also has plans to help it boost green-energy production for export by subsea cable. Deals may be on the way with US giants Exxon Mobil Corp and Chevron Corp.

For Algeria’s ruling elite, memories are still fresh of 2019’s chaotic vote, held just months after mass pro-democracy protests forced long-time leader Abdelaziz Bouteflika’s resignation.

Tebboune, a government insider seen as close to Algeria’s powerful military, won about 58% of ballots on turnout of 40%. At 2021’s parliamentary elections, participation plummeted to 23%.

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This time, the 78-year-old is facing off against Youcef Aouchiche, secretary-general of the oldest opposition party, the Front des Forces Socialiste, and Abdelaali Hassani Cherif of the Islamist party Movement de la Société Pour la Paix. Neither is seen posing much of a challenge.

The energy boom has rescued Algeria’s economy from what in early 2020 looked like a looming and intractable crisis. International Monetary Fund figures at the time showed the country poised to run a budget shortfall of 20% of gross domestic product, with a current-account deficit worse than even defaulted Lebanon’s. 

The coronavirus pandemic stretched social spending and there was speculation Algeria, which has practically no external debt, might consider IMF support.

This year, by contrast, the IMF sees growth at 3.8% and a “broadly positive” near-term outlook. Authorities offer the jobless cash handouts and promise more affordable housing and interest-free loans for start-ups.

All the same, Algerians complain of rising prices and limited opportunities, pushing some to flee to Europe. Efforts to diversify revenue — including opening up tourism and attracting more foreign capital — have been piecemeal, leaving Algeria vulnerable to sudden shocks.

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“Although high oil and gas revenues are for now keeping the government solvent, a collapse in prices could push Algeria into crisis,” said Hamish Kinnear, senior analyst at Verisk Maplecroft. That might “force the country to implement unpopular spending cuts, risking civil unrest.”

Quiet at home has allowed Tebboune to re-build Algeria’s voice internationally. Home to 47 million people and Africa’s largest country by area, it has long commanded respect on the continent and beyond for its fight against French colonialism that ended with independence in 1962. 

A stalwart of the Non-Aligned Movement during the Cold War, Algeria’s profile dimmed during a brutal 1990s civil conflict that pitted the military regime against Islamists.

UN Moves

The only Arab nation currently on the 15-member United Nations Security Council, staunch Israel-critic Algeria has been the leading voice working to advance the Palestinian cause. It’s led calls for a cease-fire in Gaza, and this year put forward a resolution to make a Palestinian state a fully-fledged UN member – a bid struck down by the US. 

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After boosting military spending to the world’s 19th-largest in 2023, according to the Stockholm International Peace Research Institute, Algeria is also being more assertive in its long-running feud with neighbor Morocco.

The rivalry centers on the Western Sahara, a stretch of mineral-rich territory on the Atlantic coast claimed by both Morocco and the Algiers-backed Polisario Front. 

Algeria cut gas supplies and most ties with Morocco in late 2021 and embarked on a diplomatic campaign in Africa and Latin America to counter growing support for its competitor’s position. That spat is a consideration for Europe, which typically treads carefully to avoid alienating either of the two nations they rely on for energy, intelligence and managing migration.

France in July took the historic step of recognizing Moroccan rule over Western Sahara. Algiers said it endangered the region and recalled its ambassador, although doesn’t appear to have taken further steps.

Paris will hope that continues after Saturday’s vote.

“A strong Tebboune is a reliable partner for the Europeans right now,” said the Crisis Group’s Fabiani.

—With assistance from Augusta Saraiva, Anna Shiryaevskaya and Souhail Karam.

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