VZCZCXYZ0000
PP RUEHWEB

DE RUEHAS #0611/01 1731618
ZNR UUUUU ZZH
P 221618Z JUN 09
FM AMEMBASSY ALGIERS
TO RUEHC/SECSTATE WASHDC PRIORITY 7619
INFO RUEHAM/AMEMBASSY AMMAN PRIORITY 0248
RUEHTU/AMEMBASSY TUNIS PRIORITY 7647

UNCLAS ALGIERS 000611 
 
SIPDIS 
SENSITIVE 
 
STATE PASS TO H 
 
E.O. 12958: N/A 
TAGS: PGOV OREP PHUM PREL PBTS KDEM AG
SUBJECT: CODEL SCHIFF ALGERIA SCENESETTER 
 
REF: STATE 60890 
 
¶1. (SBU) Embassy Algiers welcomes the visit of Representative 
Adam Schiff and his delegation on June 30 and July 1. 
Algeria is an important front in the struggle against violent 
extremism and against Al-Qa'ida in particular.  Our primary 
goal is to help reduce the threat that violent extremists 
pose to the Algerian government and society, and consequently 
in the region.  Algeria is a major source of oil and gas for 
the United States and Europe, and $20 billion in two-way 
trade makes it our second-largest trading partner in the Arab 
world after Saudi Arabia.  Although Algeria has made 
significant progress in recent years rebounding from more 
than a decade of terrorism and civil strife, a state of 
emergency in place since 1992 limits freedom of association 
and hinders civil society development.  And while the country 
is politically stable, there was some controversy over 
President Bouteflika's April 2009 reelection to a third term, 
made possible by a constitutional revision that eliminated 
presidential term limits.  The economy has liberalized 
somewhat since 2004, but recent government pronouncements 
signal a return to protectionism and economic nationalism. 
More than two-thirds of the population is under the age of 
30, and lack of economic diversity has resulted in high 
unemployment and limited opportunity for this restive young 
population.  Your visit is important to our bilateral 
relationship because the Algerians warm to high-level 
contacts that extend beyond discussions of security and 
counter-terrorism. 
 
THE ALGERIAN SOCIO-POLITICAL LANDSCAPE 
-------------------------------------- 
 
¶2. (SBU) A persistent terror threat by what is now known as 
Al-Qa'ida in the Islamic Maghreb (AQIM) generates residual 
instability and keeps the government heavily focused on 
security, in turn slowing reform, development and investment. 
 Parliamentary and local elections in 2007 and 2008 showed 
increasing public apathy and mistrust of democratic 
institutions.  A belief among Algerian youth that they lack 
political opportunity and social mobility increases 
disenchantment with the system and leaves them vulnerable to 
extremism, even as religious conservatism is on the rise. 
New foreign investment restrictions threaten to stall further 
economic reform and diversification.  While U.S. companies 
are very involved in Algeria's hydrocarbons sector, they have 
found it difficult to launch other investments here, 
including ones that would provide jobs and export 
opportunities. 
 
¶3. (SBU) As many observers anticipated, President Bouteflika 
was the victor in the April 2009 election, allowing him a 
third term in office after a November 2008 revision of the 
constitution removed presidential term limits.  Many 
Algerians asserted that the election was carefully 
orchestrated by the government; some called it a disaster for 
democracy, while others said it was essential for stability. 
Algerians were fascinated by the November 2008 U.S. 
presidential elections and made envious comparisons to their 
own electoral process.  Our message has been that while the 
November constitutional amendments and the April election 
were internal Algerian matters, we emphasize the importance 
of transparent and fair electoral processes and hope for 
continued economic reform, and the development of democratic 
institutions. 
 
OUR ENGAGEMENT: SECURITY AND SOFT POWER 
--------------------------------------- 
 
¶4. (SBU) Since late 2006, AQIM's targets have included U.S. 
and Western interests in the region.  The Algerian 
authorities generally do not discuss our extensive bilateral 
counter-terrorism cooperation publicly, and remain deeply 
suspicious of any foreign military presence on their soil. 
Despite that suspicion, in late 2007 Algeria proposed limited 
joint military engagement activities with the U.S., leading 
to 2008 naval and air force training exercises.  We expect 
more joint dialogues and exchanges in the future, but the 
process is slow-moving.  A new FBI office in Algiers, the 
beginnings of police and judicial training, and a Mutual 
Legal Assistance Treaty (MLAT) we hope to conclude in 2009 
are the next steps in broader law enforcement and 
counter-terrorism cooperation. 
 
¶5. (SBU) In recent years, the Middle East Partnership 
Initiative (MEPI), Embassy Public Diplomacy programs, and 
cooperation programs in the areas of science and technology 
have been central to our "soft" counter-terrorism work.  In 
addition to promoting economic development and prosperity, a 
more open Algerian economy and greater employment opportunity 
should also reduce the appeal of extremism and thus promote 
regional stability.  Accordingly, we have restarted the 
Fulbright program, significantly increased exchanges and 
expanded engagement in education.  English-language programs 
in particular have proven popular with both the Algerian 
government and citizenry, and we use them as tools to counter 
unemployment and provide an alternative to extremism, as well 
as in promoting U.S. values.  The U.S. Department of 
Treasury's Office of Technical Assistance (OTA) provides 
expert advice in areas such as tax reform, bank regulation 
and institutional oversight, and anti-money laundering.  We 
are seeking to conclude an Open Skies agreement and a customs 
mutual assistance accord in 2009.  We have also increased 
engagement in areas such as the peaceful use of nuclear 
technology, export controls and border security, and a number 
of environmental, science and technology fields. 
 
BIG TICKET ITEMS, AND WHERE WE ARE HEADED 
----------------------------------------- 
 
¶6. (SBU) Algeria's oil and gas production has generated 
nearly USD 140 billion in foreign currency reserves, but 
volatile energy prices are causing the Algerians to become 
circumspect again about their public spending.  While vast 
amounts of money have been spent recently on infrastructure 
projects, many of the related construction jobs have been 
temporary or given to foreign workers.  The government also 
continues to subsidize basic staples to protect the 
population from price shocks.  We have encouraged Algeria to 
make the changes necessary to accede to the World Trade 
Organization, but recent government policy announcements that 
restrict foreign investment and imports to Algeria make 
accession increasingly less likely in the near- to mid-term. 
Thus, while we seek new opportunities for U.S. business in 
Algeria as well as investment opportunities outside of the 
hydrocarbons sector, we are cautious about the business 
climate here and urge the Algerians to create a predictable 
business environment. 
 
¶7. (SBU) The Algerians are waiting to see whether a new 
American administration will bring a change in U.S. policy 
 
regarding the Western Sahara.  Algeria will not reopen its 
long border with Morocco absent progress on the issue, nor 
will it support a resolution that does not seriously address 
the concept of an expression of self-determination by the 
Sahrawi people. 
 
¶8. (SBU) Our primary goal in Algeria is to see AQIM and other 
violent extremists no longer threatening the Algerian 
government and society.  Algeria could also play a 
constructive role in the equitable resolution of conflicts in 
the Western Sahara, the Sahel and the wider region.  We would 
like to see Algeria move toward transparent 
political/economic processes and strong institutions under 
the rule of law.  It could also be better integrated into the 
global economic system, especially with a more dynamic 
internal market and a receptive investment climate.  All of 
these goals would be supported by expanded U.S.-Algeria 
political, economic, commercial, and cultural contacts, and 
from increased high-level visits such as your delegation. 
DAUGHTON