An analysis of the Algerian market: historical, political, economic, internal and regional security issues, the defence market, and recent approvals and refusals UK export licences.

1. Algeria
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2. Algeria: Headlines
 largest country in Africa, four-fifths desert
 second most populous in Arab world (37 million)
 Africa’s 4th largest producer of oil and world’s 6th
largest producer of gas
 battered by violence over past half-century: over 1m
killed in fight for independence from France; 200,000 in
internal conflict in 1990s; high terrorist threat from
AQLIM
 Politically stable. President Bouteflika re-elected 2014.
 High youth unemployment, gerontocracy and wide
social divisions are rife but contained by the firm grip of
‘le pouvoir’, the country’s long-standing power elite
 Some human rights concerns but most licences
approved
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3. Historical Background
 Part of Ottoman empire from the 16th
century
 conquered by French in 1830
 bloody struggle for independence began in
1954 led by the National Liberation Front
(FLN), which came to power on
independence in 1962 and has dominated
politics since
 Front Islamique du Salut (FIS) dominated the
first round of legislative elections held in
December 1991
 authorities intervened to cancel the elections,
banning the FIS. Vicious civil insurgency
followed, over 200,000 died
 FIS declared a ceasefire in October 1997,
disbanded in 2000
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4. Political - Recent
 Abdelaziz Bouteflika elected President in April 1999 on a platform of
restoring stability to the country. Re-elected 2004 on a programme of
national reconciliation
 violence fell rapidly but one group, the Groupe Salafiste pour la
Prédication et le Combat (GSPC) continued campaign and reformed
themselves as the al-Qaeda Organisation in the Islamic Maghreb
(AQLIM)
 Bouteflika re-elected 2009, promising a $150 billion spending
programme. In 2011 introduced some political reforms in response to
the Arab Spring, including lifting the 19-year-old state of emergency
restrictions.
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5. Political - Current
 in comparison to its neighbours, a relatively free country. Its press is
allowed to criticize the establishment, and does so regularly
 FLN supporters see Mr Bouteflika and the ruling party as guarantors of
stability, prosperity and reconciliation
 government constantly reiterates that it is genuine in its desire to
extend democracy but insists that this must be done slowly and in a
way that guarantees stability and maintenance of the peace
 citizens powerless spectators to a continued stand-off between le
pouvoir—the entrenched oligarchy that controls the state, the oil money
and the army—and Islamist radicals, who serve as a justification for
ongoing repression
 the main Islamist party, the Islamic Salvation Front remains outlawed.
The remaining opposition is weak and divided between Islamist and
secular parties. Parliament merely rubber-stamps laws the regime
wants to pass
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6. Political: President Bouteflika
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 won fourth term in April 2014, despite doing no
personal campaigning and rarely appearing in
public after having suffered a stroke in 2013
 has won praise from the West for backing the US-led
"war on terror“
 At home, many credited him with a return of some
security, though attacks by Islamist militants have
increased again since 2006
 state-orientated economic policies have failed to
wean the economy off reliance on oil and gas

7. Internal Security: Terrorism
 serious radicalisation, fuelled in part by heavy unemployment and
poor living standards
 AQLIM has launched an ongoing series of kidnappings and
bombings targeting the Government and Western interests
 Islamist groups throughout Sahara are linking up under its umbrella,
reinforced by arms obtained during the Libyan civil war
 Algerian security forces have been successful in countering
terrorism inside Algeria, to the extent that the majority of AQLIM has
relocated to northern Mali
 January 2013, major terrorist incident at gas facility near In Amenas.
Algerian Army and Government received a mix of criticism and
praise for handling of the incident (which resulted in the deaths of
the majority of the terrorists, and some hostages).
 On 19 April 2014 terrorists attacked the Algerian army in Tizi Ouzou,
killing 11
 a French national, kidnapped on 21 September, was reportedly
murdered on 24 September by a group claiming allegiance to ISIL
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8. Internal Security: Protests
 In 2001 the government agreed to a series of demands by
the minority Berbers, including official recognition of their
language, after months of unrest.
 Algeria did not see large scale uprisings of the type
experienced in Egypt and Tunisia
 But strikes and protests are an everyday part of life, mostly
around housing conditions and sector specific issues
(working conditions/salaries)
 Most are peaceful, but some have involved clashes between
police and demonstrators
 Major protests broke out in January 2011 over food prices
and unemployment, with two people being killed in clashes
with security forces.
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9. FCO Travel Advice
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FCO advise against all travel to areas within:
 450km of the Mali and Niger borders, with the exception of
Tindouf town and Tamanrasset city
 100km of the Mauritania border
 100km of the Libya and Tunisia borders south of the town
of Souk Ahras
FCO advise against all but essential travel to: Tamanrasset
city, In Amenas, Tindouf town, the provinces of Boumerdès,
Bouira and Tizi Ouzou east of Algiers (the area known as the
Kabylie)
Take great care in the remaining areas of the provinces of
Adrar, Tamanrasset and Illizi which are not specifically
covered above, and the provinces of Bordj Bou Arreridj, Bejaia
and Skikda east of Algiers, due to the ongoing threat from
terrorism.
ongoing security operations along the Algeria/Tunisia border
in the Chaambi mountains area, south of Souk Ahras. There is
an increased threat in this area due to the potential presence
of extremists and there have been a number of recent attacks
against security forces.

10. Regional Relations
 Morocco:
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 Algeria and many other states reject Moroccan administration of Western
Sahara; the Polisario Front, exiled in Algeria, represents the Sahrawi
Arab Democratic Republic;
 each accuses the other of harboring militants and arms smuggling;
 although there has been no conflict for over 30 years, Algeria and
Morocco are both competitive with their acquisition of military equipment.
Some risk of a regional arms race.
 However, although the border remains closed, neither country has an
interest in raising military tensions or destabilising the region.
 Libya
 in turmoil on eastern border but no sign of overspill to date, though
availability of light weapons is fuelling insurgent groups across the Sahel

11. Economy: Overview
 GDP growth: 3.3%, expected to average 5% for 2013-2016
 GDP per head: $6,170 (PPP: $14,370)
 Inflation: 3.6%
 Budget balance (% GDP): -1.7
 Population: 40.0m
 dominated by oil and gas - 98% of export revenues and 60% of budget revenues. Hit by low
oil price: budget balances at $131. Current price $77
 policy of diversification: a $286 billion 5-year spending programme, largely focused on
infrastructure projects including housing, water supply, road & rail links, developing new port
facilities, promoting technology start-ups, developing tourism industry
 renewable energy and energy efficiency programme envisages installing 22 000 MW of
generating capacity from renewable sources by 2030 – with 10 000 MW destined for export
to Europe.
 Foreign Currency Reserves around $190Bn
 poverty remains widespread and unemployment high
 Endemic government corruption and poor standards in public services are chronic sources
of popular dissatisfaction.
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12. Doing Business: Strengths
 significant government spending over the next 5 years, in particular on
infrastructure projects
 Strong economic fundamentals
 one of the highest GDP per capita in Africa
 Labour costs are low
 Foreign currency reserves are around $200 billion
 Low inflation
 In addition to oil and gas, many other natural resources such as gold,
iron, zinc, uranium, copper, phosphate, tungsten and kaolin. And
enormous potential for renewable energy, in particular solar, wind and
tidal energy.
 a hub for Europe, the Maghreb and sub-Saharan Africa
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13. Doing Business: Challenges
 absence of a level playing field for all companies, foreign
and domestic
 Increased commercial competition from China
 lack of transparency in bureaucratic and judicial
processes
 unwieldy bureaucracy - decision making can be slow and
complex
 lack of reliable information whether statistics, data about
institutions or contact information.
 need for personnel to be fluent in French
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14. UK Relations & Trade
 bilateral relationship in excellent shape.
 UK is one of the largest foreign investors, BP the largest
 UK has a strong reputation for quality, innovation, customer service and
know-how
 bilateral trade is increasing with the UK ranked as 10th largest supplier
during 2013. Exports in 2013 reached £529m and on course to match that in
2014. Only Nigeria, Egypt and South Africa are significantly bigger markets
for the UK across the continent.
 a developing strategic security relationship with Algeria and the PM has
recently made statements confirming that we stand side by side Algeria in
the fight against terrorism
 Our offer to them focuses on border control including use of UAVs, counter-
IED training and equipment, explosive trace detection machines to bolster
aviation security, and cooperation to mitigate the threat from MANPADs
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15. Defence & Security Market
 has arguably supplanted South Africa as region’s largest and most dynamic market
 historically, Russia and Ukraine were leading equipment suppliers. In recent years,
increased activity by Germany and Italy and more recently the US, underpinned by strong
political support
 Focus on equipment for:
 border security
 naval equipment - traditionally from former Soviet Block but they have recently
diversified and are purchasing Frigates and Offshore Patrol Vessels from Germany and
China (despite a long and expensive campaign fought by BAE)
 Land Forces requirements and the Air Force’s fast jet procurements traditionally
supplied by the Russians
 Any tender related to national security is closed (i.e only sent to specific companies and not
published). If they find a company they want to do business with, the Defence Attaché in
London will contact the company directly.
 system is very bureaucratic and even simple decisions are made at an extremely high level
within government
 all responses to tender must include an element of technology transfer. There is a very
limited indigenous defence industrial capability but Algeria plan to increase this
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16. Export Licensing Criteria Concerns
1. UK’s International Commitments
2. Human Rights and Internal Repression
3. Internal Situation of recipient country
4. Regional Stability
5. National Security of UK and allies
6. Behaviour of recipient country
7. Diversion
8. Economic Sustainability
+ Other Factors – commercial, political, strategic
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Criteria 1-4 are
mandatory

17. Criterion 2: Human Rights
Crowd Control Concerns:
 extensive security establishment is generally regarded to exercise
restraint when dealing with protestors, under orders from the top to
maintain stability in the light of volatility elsewhere in the region
 ban on street protests remains in Algiers, due to concerns that they
would be exploited by terrorists. Protests do nonetheless occur in
the capital and are generally broken up by police at the outset
 have been instances where the police have been accused of using
excessive force in crowd control, but these appear isolated
 for recent large protests (10,000 unemployed in Ouargla), the
police followed top level orders to deal calmly with demonstrators.
This generally meant not carrying lethal equipment, and avoiding
confrontations
 cannot rule out an overly strong police action to violent riot
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18. Criterion 2: Human Rights
Counter Terrorism Concerns:
 regular soldiers are responsible for securing an area of interest and establishing
a secure cordon, whilst Special Forces (GIS – Special Intervention Group) or the
active military units of the Intelligence services (DRS), are the active pursuers of
suspected terrorists
 GIS undertake many operations, but the DRS also frequently intervene and run
operations themselves to reduce the likelihood of a fire fight (and thus
casualties)
 CT operations are carried out by the MOD, Gendarmerie and DRS (Intelligence
Agency) and have not involved the police
 reports from Amnesty International and the US State Department contain
accusations of human rights violations committed against terrorist suspects,
including: torture and cruel, inhuman and degrading treatment or punishment,
unlawful prolonged detentions, incommunicado detentions and unfair trials
 But the Algerians recognise that the best way to win public support (which they
term the psychological war on terrorism), and reduce AQIM recruitment, is to
conduct CT efforts within a strict legal framework, bring suspected terrorists in
alive and try them in the judicial system. Genuine effort to pursue this course
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19. Criterion 4: Regional Tensions
 although there has been no conflict for over 30 years, Algeria and Morocco are
both competitive with their acquisition of military equipment. Some undesirable
prospect of a regional arms race.
 However, although the border remains closed, neither country has an interest
in raising military tensions or destabilising the region.
 Overall, little evidence that supply of defence equipment to Algeria will lead to
an increase in regional tensions.
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20. UK Licence Approvals Apr 13-Mar 14
SIELs – Military: £1.9m
 military image intensifier
equipment, infrared/thermal
imaging equipment, weapon
night sights (£1m)
 components for body armour
 components for combat naval
vessels
 components for naval gun
installations/mountings
 components for military
communications equipment
and military electronic
equipment
 components for military
guidance/navigation
equipment
 equipment for the use of
military aircraft ground
equipment
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Licences included

21. UK Licence Approvals Apr 13-Mar 14
SIELs: Dual Use: £2.9m
 X-ray generators (£1.7m)
 equipment employing
cryptography (£1.2m)
 animal pathogens
 corrosion resistant chemical
manufacturing equipment
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Licences included

22. Refusals and Revocations
Apr 13 – Mar 14
 Revocations: 2 OIELs covering:
 software and technology for military communications equipment
 Refusals: no SIELs, 1 OIEL covering:
 components for combat aircraft
 components for combat helicopters
 components for military aero-engines
 components for military helicopters
 components for military support aircraft
 components for military training aircraft
 general military aircraft components
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23. Licensing record
Despite concerns, Ministers have recently approved most applications including:
 military equipment likely to be used in support of CT operations
 Navy and Air Force. It is not uncommon to see components for naval vessels used for
coastal surveillance, Search and Rescue (SAR) and anti-trafficking operations, or for
Helicopters used for the same purposes
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 oil and gas industry and for IT networking or telecommunications equipment for civil end use
 Counter-IED and bomb/chemical trace detectors for civil and Government end use
 Cryptographic software for civil end use
 Many exports going to Germany, Sweden, Italy, South Africa or USA for incorporation into
larger platforms such as MECO 200 Frigates, the SEAHAWK, Super Lynx 300 and Sea
Giraffe for onward sale to the Algerian Navy, Air Force and MOD
Main concerns over exports of equipment:
 with clear associations to internal repression
 clear link to use in CT Operations, especially in large quantities, could potentially raise C2
concerns in particular guns, ammo, body armour, surveillance equipment, phone
tapping/jamming equipment (such as IMSI Grabbers), radio communications and Armoured
Personnel Carriers (APCs)

24. Conclusions
 Relatively stable politically
 Significant threats from terrorism
 Developing strategic relationship with UK
 Increasingly substantial market, open to UK suppliers
 Few licensing concerns for the military or civilian end use
 Most concerns around surveillance CT equipment for
intelligence agencies or police. But not overriding
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25. Any questions?
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Richard Tauwhare
Green Light Exports Consulting
Email: richard@greenlightexports.co.uk
Web: www.greenlightexports.co.uk
Phone: +44(0)770 311 0880