Message from the President of the Republic of Algeria, Abdelaziz Bouteflika

ABDELAZIZ BOUTEFLIKA President of the Republic of Algeria

Today's Algeria has resolutely set out on the road to modernity. It is implementing profound changes to bring its increase in population under control, to transform its political life, to strengthen security and to modernize its economy. It is broadening the scope of its international cooperation and expresses the hope that the United States will play a major role in this regard.

On the issue of population increase, Algeria is no longer what it used to be. Its rate of growth is now down to only 1.6%, while it had reached 3.2% fifteen years ago. Urbanization, coupled with the fact that girls' education has become widespread and that young women have joined the labour force accounts for this demographic transition.

The population, which is still very young, aspires to change, to effective participation in public affairs and to an improvement in its standard of living. More and more women are entering the workforce and voting in elections. Women are present in the government. Aspirations in the areas of education and culture are rising. Healthcare needs have been transformed. These are all challenges that call for ambitious measures and call upon politicians to act.

On the political level, since 1989, our political system has changed, with the abolition of the single-party system and the introduction of pluralism. Free and transparent elections are organized on a regular basis, allowing many parties to compete. The press is free, diversified and dynamic. Debates in Parliament are open and often impassioned. There, the opposition parties express themselves freely and vigorously and vote according to their convictions. Five of these parties are part of the governing coalition and voice their specific concerns while sharing the responsibility of management.

Within this framework of pluralism, I have initiated several reforms to modernize our institutions: the educational system that is so crucial in order to embrace and strengthen modernity; the justice system that is so necessary to strengthen the rule of law and the legal security of contracts, and finally the Civil Service and the State- which are so important for bringing public action in line with social aspirations and the needs of a modern market economy. Reform task-forces, which are pluralistic in their make-up, have submitted reports whose recommendations will be gradually implemented by the Government. Finally, by way of confirmation of our deliberate choice in favor of cultural pluralism, a constitutional amendment has devolved on Tamazight- now spoken in several regions of our country the status of a national language.

In terms of security, the policy of civil concord, which I asked the Algerian people to approve by referendum, has undeniably produced results through a widely acknowledged return to security in the cities and most of the rural areas. Over the course of recent years, Algeria, in its struggle against terrorism, has paid a heavy price on behalf of its own people and of others, for peace and security in the Mediterranean region and throughout the world. Sadly, it was not until the tragic events of September 11, in the United States, which targeted the American people, that this reality was recognized: Algeria struggled alone, for ten years, confronted with planned isolation and calculated indifference. Security has returned to my country thanks to the Algerian people and to its armed forces.

On the economic level which is so decisive for reinforcing democracy and stability through the creation of wealth and jobs and for reducing poverty, I am fully committed to reforms. A social and political consensus has finally been reached in favor of a market economy that is open and competitive. Greater macro-economic balance has been achieved. Government deficits, which were so large in the 80's and 90's, have given way to surpluses since 2000. The international balance of payments is under control and inflation is being held in check.

The liberalization and privatization of the economy have likewise moved ahead rapidly over the course of the last few years. There is growing liberalization of economic activity and the private sector is now largely dominant in the economy. The energy and mining sector, the telecommunications sector, and the air transportation and steel sectors are now largely open to competition, complementing the long-standing liberalization of the consumer goods sector. Subsequent to the recent sale of a mobile telephone service license, the long-standing operator is searching for partners.

The legal and regulatory framework for privatization and investment has been improved and partnership and privatization deals are multiplying. Consequently, direct foreign investments in my country have been growing for the last two years, over and above the long-standing investments in the hydrocarbon sector. The banking sector, largely open to competition, already includes twelve private banks, including Citibank.

Corporate assessments for workers' benefits have gradually decreased, the cost of lending has dropped, and the exchange rate has been stabilized. Business-friendly incentives and measures have become part of the new legislative framework.

On a parallel track, a major Government program to sustain growth, amounting to almost 7 billion dollars, was launched in June 2001 to strengthen the development of economic infrastructure, the renovation of social infrastructure, the renewal of agriculture and fishing and the improvement of living standards in rural areas. The Algerian market is now developing even faster thanks to this program, coupled with increasing household demand sustained by wage improvement measures, and by subsidized housing financing..

These measures will reinforce the growth which is already underway, as exemplified by the increasing dynamism of machinery imports.

Progress in all of these areas cumulatively enhances the attractiveness of the Algerian economy for foreign investors. This is further enhanced by the country's geographic location which opens up promising foreign markets for Algeria.

Algeria signed a free trade agreement with the European Union in April 2002, opening up the affuent European market to investors based on its own soil. By signing this free trade agreement and by overhauling its tariff system with a view to speeding up the pace of liberalization, Algeria has taken the challenge of substantially up-grading the efficiency of its economy and of taking an active part in the global economy by rapidly diversifying its activities with the support of foreign companies.

Algeria is thus playing a large and increasing role in supplying Europe with energy. Beyond its past achievements, my country is committed to implementing some major projects linking it to Italy and Spain. Added to this is the planned gas pipeline that will enable us to carry natural gas from Nigeria to Europe. These are all investment opportunities for companies in the oil and gas sector.

Also on account of its geographic location, Algeria has spared no effort to ensure successful cooperation in the Maghreb sub- region and monitors with interest changes taking place in Sub-Saharan Africa. Algeria is aware that the economic prosperity of each of the countries of the Maghreb sub-region is a guarantee for the stability of all. A prosperous and stable Maghreb which Algeria craves for, also constitutes a promising economic prospect.

Algeria is also aware of its strategic role in the relations between the United States and Africa. Together with South Africa and Nigeria, Algeria has initiated, developed, propagated and institutionalized the NEPAD, the New Partnership for Africa's Development. The NEPAD confirms a new relationship between Africa and its development partners: better political, economic and corporate governance on the part of the African countries and increased attention and assistance on the part of the industrialized democracies in the area of aid, technical assistance, trade and investment and external debt alleviation. This partnership was sealed at the meeting between the members of the G8 and the initiators of the NEPAD last June in Kananaskis, during which I had the pleasure of seeing President Bush again.

For all these reasons, my country can legitimately advocate, beyond its already significant trade with the United States, for the establishment a model partnership in investment and trade underpinned by appropriate bilateral agreements.

Diversifying sources of growth has become an imperative for Algeria. For my country, the opening up of developed countries' markets is a necessary condition for growth, but is not sufficient in itself. We must produce more; we must produce better; we must produce other things. The cooperation between Algeria and the United States must first be strengthened by instituting an appropriate framework of agreements to encourage investment and technology transfer.

U.S. exports to my country have grown continuously and the potential for increased U.S. imports from my country is still significant, particularly in the area of natural gas. I am pleased to note that American companies, both financial and non-financial, have gained a foothold in the new dynamic Algerian economy. They have successfully competed in bidding for oil projects worth considerable amounts of money. They are also competing in calls for bids for the supply of infrastructure equipment for mobile telephone networks. They are present in the banking sector as it opens up and we closely follow up on the resolution of the technical problems that they may encounter. American companies have long been active in the hydrocarbon sector, which the upcoming law will largely open up to competition, since foreign investors will no longer be forced to partner with Sonatrach to produce and export. The opportunities are also palpable in other sectors, such as pharmaceuticals.

Your corporations, equipped as they are with technology and know-how, favored by an increasingly shared linguistic capital, have managed to find the road to success in the new Algerian economy, particularly when it has been a matter of entering into open and fair competition with other operators. I welcome this and voice the hope that this trend will endure, particularly in the sectors in which American companies excel and have no fear of competition.

In foreign countries in general, and in the United States in particular, knowledge of the reality in Algeria - as it undergoes intense change- is limited, as though distance has so far bred ignorance. Doubtless, the complexity of the transitions that Algeria is experiencing, along with the fact they are simultaneous and interdependent, may account for the difficulty to grasp the way events unfold from the outside. Algeria deserves to be better known; it seeks more understanding and more solidarity to sustain its efforts at reform and modernization. The American tradition, founded in freedom and generosity gives us a sense of optimism.