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DE RUEHAS #0001/01 0030847
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P 030847Z JAN 07
FM AMEMBASSY ALGIERS
TO RUEHC/SECSTATE WASHDC PRIORITY 2636
INFO RUEHLO/AMEMBASSY LONDON 1477
RUEHMD/AMEMBASSY MADRID 8505
RUEHFR/AMEMBASSY PARIS 2037
RUEHRB/AMEMBASSY RABAT 1564
RUEHTU/AMEMBASSY TUNIS 6416
RHMFISS/HQ USEUCOM VAIHINGEN GE

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 
---------------------------------------- 
 
¶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 
-------------------------------- 
 
¶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. 
 
-------------------------------------- 
OLD ALGERIAN PARANOIA ON DISPLAY AGAIN 
-------------------------------------- 
 
¶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 
------------------------------------ 
 
¶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. 
 
------------------------------------ 
NO CONSTITUTIONAL OR CABINET CHANGES 
------------------------------------ 
 
¶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 
------------------------------- 
 
¶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