Miriam Shabafrouz

Fuel for Conflict or Balm for Peace? Assessing the Effects of Hydrocarbons on Peace Efforts in Algeria

GIGA Working Paper, No. 132, April 2010

Abstract
This paper explores the use of hydrocarbon revenues in post‐conflict Algeria. While the bloody years of the 1990s now seem to be over, recurring terror attacks and the ongoing state of emergency leave room for doubt that a situation of stable peace has been achieved yet. It is therefore necessary to evaluate the effectiveness of post‐conflict peace‐building efforts in Algeria and identify ways of improving these measures. The resources, which are mainly controlled by the central state, can have positive and negative effects on the political economy: they can enhance growth and possibilities for the distribution of wealth, but the dependency on them makes the whole economy vulnerable to crises. Analysing the economic (and other) causes of the outbreak of the intra‐state war in 1992 and the reasons for its escalation and its fading out can be revealing when assessing the extent to which critical conditions have or have not been addressed by recent and current peace‐building efforts. The author’s analysis reveals that the measures taken by the government—such as implementing a programme of national reconciliation, the stimulation of certain sectors of the economy and the resolute reduction of foreign debt—all aim at stabilization and have all been driven by hydrocarbon income to a large extent. However, the recent rise and sudden drop in the price of oil and gas have both had an effect on the scope of these measures and reveal their limits. Moreover, some of the critical causes of the civil war such as the unfair distribution of revenue, the lack of political participation and destabilizing demographic changes still persist and have largely remained unaddressed. One of the author’s concluding assumptions therefore is that it is very likely that the use of resource revenues for conflict prevention and peace‐building will only lead to sustainable results when embedded in full‐fledged reforms of Algeria’s entire economic and political system.

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