Algeria security note: Inadequate government response to protests could bring economy to complete halt

MEA Risk Security Note: 14 March 2019: Algeria is facing the real possibility of a complete nationwide industrial shut down, should the government fail to ease popular protests and deflate the ongoing political crisis. 

An inadequate response would include but not limited to:

1- No clear pronouncement on President Bouteflika’s departure when his term ends in April 2019
2- No time table on the holding of new election
3- No details on the conference aimed to pave the way for a new constitution.
4- No formation of government with new and neutral figures
5- Etc.

Failure to provide responses to the above, we expect to see a crippling nationwide strike in industry, administration, public sector entities, big industrial zones like Rouiba, Hadjar, Arzew, oil and gas sites, the services sector, etc. No industry or region will be immune

What is the basis of this assumption?

Just on the 11th of March (few days ago), unidentified calls for a strike hit social media targeting northeastern Algeria.  Many of the country’s top industrial zones are located in the northeast and include Skikda, Bejaia, and Annaba, to name just a few.

Anonymous calls for a general strike were widely followed in the northeastern provinces, beginning 9 March, a day after the massive Friday nationwide protests. The strike eventually stopped after the President announced he will no longer seek a fifth term, but it will resume should the government decide to hold tight on its position and does not provide acceptable compromises.

The sources of the calls were unidentified. Among the most hit provinces was Jijel, where rural populations found themselves without supplies, as stores and shops began closing as early as Saturday,  9 March. The calls followed with a population rushing to stores in anticipation of the strike. There were long lines in petrol stations and bakeries ran out of bread quickly, with buyers jostling for a few baguettes. Public administrations and companies were not left out. Sonelgaz employees observed silent protests, as banks and post offices closed. In the neighboring province of Mila, the general strike affected all the region, including the most remote villages. All businesses were closed across the entire province, and locals reported that the only things working were “traffic lights.” In the city of Chelghoum Laïd, the only wholesale market supplying to the region went on lock down. The city of El Tarf turned into a ghost town where traffic was reduced to a minimum and the bus stations deserted. Employees of the administrations and banks, post offices and Sonelgaz first went to their workplaces and then left the premises to join the strike.

While petrol stations were kept open by calls from union boss Hadj Tahar Borra, who argued for the need to thwart speculators from “imposing their laws,” it was not the case in the city of Batna, where no single shop, including gas stations opened.

Other eastern provinces that joined the movement with widespread closings include Biskra, Guelma, Setif and Skikda where, in addition to closed shops and schools, banks and post offices were deserted, and activity at the port was frozen at around noon on 11 March. This is while at the petrochemical industrial zone, all production

units seized operating at 1pm. Only pharmacies and a few bakeries remained open in the morning. Urban and inter-city transport sector also followed massively the calls for a general strike. In the province of Bordj Bou Arreridj, the strike also affected the public health sector. Emergency doctors and staff were the only ones working to ensure continuity.

Added Assumptions:

The past week has seen an escalation of dissent within the state-controlled labor union UGTA. The union world has began to distance itself from the government and forces calling for a strike are getting louder. 

Several sector unions, generally tied to the government-controlled UGTA labor union have broken ranks with UGTA to either announce their support to the protesters and/or entirely reject Bouteflika’s fifth mandate. One of them is the union representing the state-owned TV enterprise ENTV, extending into the unions of the public transport sector, the port terminal of Bejaia and the steel-maker of Hadjar in Annaba.  Another risky move for the government and the UGTA ahead is the loss of control of the union in vehicle-maker SNVI, which announced a four-day strike starting Monday, 11 March 2019, but stopped as the President published his announcement.

Your Posture: 

Companies operating in Algeria should be watching events there with the eye on what the Bouteflika government is doing and planning and how the “street” is reacting. A nationwide strike could prove to be a source of trouble for companies doing business in Algeria, not in terms of physical violence, but in terms of business continuity.  There are already some collateral damage on business from the ongoing crisis:

1- Government authorization of a Ford assembly project cancelled:  A large assembly project for Ford Motor vehicles in Algeria scheduled to have government authorization has been shelved and canceled for the time being.  With the political crisis hitting Algeria, the authority in charge of authorizing foreign investments has seized operating as a new government is being formed.

2- Departure of Prime Minister Ouyahia could lead to change in Sonatrach leadership: The resignation of Prime Minister Ahmed Ouyahia could pave the way for the dismissal of Sonatrach CEO, Abdelmoumene Ould Kaddour.  Sources in Algiers say the oil company chief is seeing his support system quickly crumble and could be in the chopping block, to be likely replaced by a Sonatrach and Energy Ministry insider, Mustapha Hanafi.  Ould Kaddour is criticized for his management style, which did not earn him many friends within Sonatrach. His biggest problem however is the dismal performance of Sonatrach in the fourth quarter of 2018.

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