This year Algeria's Ministry of Defence has asked for a budget of $10.3 billion in order to face growing security challenges. The elusive militant Mokhtar Belmokhtar, who French intelligence call the "uncatchable" was thought to have been killed by Chadian forces in Mali, but it turned out not to be true. On May 23 he directed a suicide attack against a military base and a uranium mine in Niger, which killed 25 people. Algerian anti-terror forces have spent over five years trying to persuade Belmokhtar to surrender, but to no avail. The Algerian government's determination to lend its support to its neighbors, such as Mali and Niger has also raised the likelihood that al-Qaeda and its offshoots will continue to target Algeria through its porous southern borders. The country is already embroiled in a serious hostage crisis, which began in April 2012 when seven Algerian diplomats were captured in the northern Malian town of Gao by members of the radical Islamist group, the Movement for Oneness and Jihad in West Africa (MUJAO). So far three have been released, but MUJAO claims that one diplomat was executed in September, but this has not been confirmed. The group demands a ransom equivalent to $19 million and for Algeria to release its members currently in detention. However the Algerian authorities have been explicit in their opposition towards paying terrorists ransom money. It welcomed a recent declaration by G8 leaders to refuse payments to terrorist groups. A Foreign Ministry spokesman said that Algeria would continue to "work actively" on this issue with its British and American partners.
In the wake of January's attack Algeria has been under pressure to maintain and attract foreign investment into the country. Foreign companies are limited to a maximum 49 percent stake in investments, as they are obliged to have a local partner. Algeria's national oil and gas company Sonatrach is given majority ownership of projects. Often foreign companies are reluctant to invest due to past allegations of corruption within the company, as well as a lack of fiscal incentives offered by the government. This is particularly noticeable during licensing rounds. To try and win back foreign investors, in January Algeria's parliament agreed to a series of amendments to the country's hydrocarbon law. Nevertheless, Algeria has gained a reputation as a difficult country in which to do business. In 2013 the Heritage Foundation index of Economic Freedom ranked Algeria 145 in the world, putting it below Laos.
Nevertheless, the government has been working to allay fears by announcing it is taking tougher measures against corruption. Nouredine Bouterfa, the chief executive of the state's gas and electricity company Sonelgaz and fifteen other executives are under investigation over the awarding of contracts to General Electric and the French power generation company Alstom. The Italian oil and gas contractor Saipem has been in trouble with the Algerian and Italian authorities for allegedly paying bribes to Algerian officials to win contracts. Saipem is a subsidiary of the Italian oil giant ENI and both are accused of allegedly paying over $255 million to secure a $14 billion deal with Sonatrach. On June 20, it was reported that according to Energy Minister Youcef Yousfi any foreign company convicted of corruption would be blacklisted from working in the country and may be asked to pay reparations.
Algeria's relations with GCC members are giving it reasons to be optimistic. For instance, trade between Algeria and the UAE has been growing at 60 percent annually from 2005. UAE's state investment agency Mubadala launched a power plant in the Berber-speaking town of Tipaza in 2009, adding 20 percent to the country's energy supply. Algeria and Qatar have also signed a number of partnership agreements covering areas such as industry, mining, oil and gas. The former Emir of Qatar visited Algeria in January and both countries agreed to the construction of a steel plant, which will have a production capacity of 10 million tonnes of steel per year. Saudi-Algerian relations have also been improving. In November, Algerian diplomats celebrated the country's national day with Saudi officials in Jeddah and Saudi investors have also shown interest in purchasing Algerian farmland. On June 19, the 6th Algerian-Omani Joint Committee was opened and Algeria's foreign minister said the meeting would "help enhance our economic cooperation and open promising prospects for greater coordination and complementarity and for strengthening brotherly ties and cooperation".
Even though Algeria has foreign reserves worth $200 billion, the country is still suffering under the burden of social inequality. Although the IMF has indicated that unemployment is expected to fall to 9.3 percent in 2013, many consider this number to be skewed in light of realities on the ground. Algeria has seen a spate of protests over unemployment. Earlier this year, there were clashes in the southern town of Ouargla, over unemployment and the lack of housing. Youth unemployment is far greater than the national average and many young men or harragas, meaning "those who burn" try year after year to cross the Mediterranean illegally looking for a better life in Europe. After the start of the Arab Spring, the Algerian government agreed to lift the state of emergency, offer generous social handouts, low interest loans and cheap housing. Algeria's banks have announced they will finance a $15 billion housing project to complete 250,000 homes by the end of next year. However the Algerian government has committed itself to two major housing construction programmes to construct 1.2 million and 2 million homes since 2005, but both have fallen short of their targets. Nevertheless the government is aware that as soon as tensions start to rise, it can use its resources to placate the population. Recently, an Algerian medical student told foreign journalists: "There is oil here, and every time the people aren't happy the government gives them money". President Bouteflika will probably stick to this policy until the end of his term in office, and will not play an active role in public, which has been the case since his re-election in 2009. If we are to see a dramatic shift in Algeria's domestic policies, then we will most likely have to wait for his successor. Given that Algeria's neighbors are currently in the midst of enormous political and social upheaval, it is probable that Algerians will want a managed transition, especially in light of the country's brutal civil war. Even so, the departure of Bouteflika from politics will mark a new age for Algerian history, as he is one of the last remaining leaders from its time of independence.
