Does rente hinder democracy in Algeria



● Amel Ouchenane

 

Does rente hinder  democracy in Algeria

 

Introduction:

 

A rapid look around the world demonstrates that few rentier countries can be classified as democratic states, especially those in the MENA region; therefore, scholars have suggested that oil wealth blocks democratization process. Other scholars linked the lack of democracy in rentier countries immediately to their dependence on oil rent.  Furthermore, researchers clarified that rentier states have common characteristics like, weak civil society and low middle-class formation, no taxations on citizens and higher scales of suppression as participating to the dictatorial of rentier states. The aim of this article is to highlight the relation between rentierism and democracy.

 

1/ Rentier effect Less taxation weak civil society:

 

Algeria is very dependent on oil and gas, which accounts for 95 per cent of export earnings and one third of the national GDP. Oil economists claimed that any fall in oil prices could affect the Algerian economy, social and political stability;Algeria has a significant role in the international oil and gas market. It is the third largest natural gas producer in the Arab world after Qatar and Saudi Arabia, the leading gas exporter in Africa and an energy supplier to France, Spain, Italy, Turkey, US and China[1]The Algerian dependence on oil created structural political, economic and social problems, one of them is authoritarianism, which has different manifestations, and the study dismantles this phenomenon in Algeria through three main aspects: political, economic and social through two levels domestic and international.

 

It is important and critical to understand how rent affects the nature of a rentier state, why oil-exporting countries are considered less democratic. One of rentier state scholars Beblawi argues that rent provides a source of income to oil-exporting countries that grant them to have very low and weak domestic taxation structures. Other scholars like Luciani present similar argument, who claim that high rents liberate the state from the need to increase income domestically. Moreover when citizens, do not pay for taxes, they are much less Demanding of the government., also government expensing on public goods preserves the indispensable support and acquiescence for standing authority, also since the state does not demand a financial contribution from the citizens, they resort to be satisfied with the expense of the state, even when benefits and interest are not equally distributed.

 

Another important factor which explains the rise of authoritarianism in rentier countries which is the social groups, In addition to minimal taxation in these countries, there are higher amounts of patronage spending, which helps to the government’s staying power. The government also utilizes oil revenues to prevent and stop the formation of certain social groups that would rise the demands and requests on the government for more democracy and less authoritarianism.[2]

 

The taxation is not only an economic matter but also a political one, taxes means representation, rights and duties..etc. .The ‘neo-classical’ theory of the state developed by Douglass North clarified that taxes are connected with representation and democracy, therefore, less taxation means less democracy.[3]In addition, Adam Przeworski and Fernando Limongi, claim that in rentier states, limited taxation decreases the people’s influence to keep the rulers responsible, because the rentier state allocates jobs, services, money to them. This manner of guarantying political obeisance and loyalty produces patron‐client relations, rather than democratic exchanges, between the governor and people.

In addition, the rentier state’s welfare policies create a huge bureaucracy, which prohibits the emergence of independent civil society. In addition, the revenues can badly affect individuals too, because it transforms to a serious barrier to the morals of work. Furthermore income is no longer a recompense of serious work but it is related to special coincidence and circumstances like chance, hazard.., etc., another important aspect is that  rents help authoritarian regimes with the monetary  ability to enlarge their tyrannical security system and to use state‐owned means of communication like media and other propaganda mechanisms to attack  the opposition.[4]

 

In Algeria, non-oil tax revenues constitute 10.2 %of the country’s GDP this figure is under the average index in developing countries and under the rate in the neighboring oil importing like Morocco and Tunisia. The IMF model 2014 argues that, Algeria has not attained its tax potential and should look into reducing costly tax exemptions. Moreover, according to Algerian statistics, 46 %of wage earners were unregistered workers .Some types of taxes are even non-existent in Algeria like property taxes. In addition, it argues that oil wealth supports authoritarianism through patronage. It faced with expended disturbance, as the very first countermeasure, Algeria agreed to repeat the subsidies for foodstuff, therefore, the import of food products rose by 60 %in comparison to 2010 and the invoice of imports reached 46 billion dollars as a result. Algeria also raised pays of civil workers by 46%. At the same time, the regime was determined to relieve the policies controlling the street vending in order to keep unpaid youth far from the protestation. [5]

 

In Algeria the informal economy is predestined at 6 billion USD, which means 13 %of GDP outside the oil and Gas sector and provides jobs to nearly 2 million people 22 %of the active force, any attempts to stop this business without inserting a real development and job creation had proved to be costly and risky. In addition, the government assigned fundamental amounts of money for interest-free loans for young people. Only in 2011, more than 50.000 small enterprises giving jobs to 70.000 young people were created with the financial help of the government; according to IMF, the Algerian government gave to its citizens more than 23 billion dollars in public grants and retroactive salary and benefit increases. Algerian spending increased by 50% in 2011. The abundance of its financial reserves, standing at 182 billion dollars as of December 2011, which makes the Algerian regime able  to expand and develop  its patronage policy and facilely buy off popular opposition .[6]

Therefore, the oil rents accrue directly to the state, which has discretionary power over how the revenues are spent. The state can subsequently afford to buy off or repress political opposition. The regime can purchase consent and acquire a form of legitimation through government expenditure on a welfare system. This includes spending on education, health, social security, employment, infrastructure and investment in the private sector.[7]

 

2/Repression and the military role:

 

In this concern, Ross argues that there are at least two reasons why resource wealth might lead to larger military forces and elite. The first one is self-interest improving the self-defense and the capacity to respond militarily also get rid of the constant fear of the others and their  pressure so this is what an authoritarian government will do so. The second reason is that resources wealth provoke conflict and there is always a need to the military role to keep order[8]

 

In the geopolitical Mediterranean context, Algeria represents a key country. Because it is the largest and most populous North African state and it has large oil and gas resources, in the mid-1980s under the Chadli presidency, Algeria started to give up the striped economy and became closer to the western model. Also during the social and economic crisis in 1988 the regime was convinced that it is time to adopt political reforms, but the process failed and the military dominated with a western support, France was especially against the rise of the Islamic Front The issues disturbing western countries are: security of investments, the fate of liberal economic reforms, an anti-western regime at the frontiers of Europe, and the access to oil and gas resources.[9]

The Algerian army presented itself as the defender and the protector of democracy and as a credible partner for western interests. The Algerian army is still able to use the saving of energy resources and the readiness to improve the economy and to support from the West, which in turn will guaranty the existence and the survival of the regime. Furthermore, after the coup attempt, France gave $550 million in help to aid Algeria import food and a western consortium provided $1.45 billion in credits this aid could be explained as a payment to the Algerian military for a job well done.[10]

 

The United States also supported the Algerian military, because of the oil company presence in the Algerian Sahara, the United States encouraged its oil and gas multinationals to invest in Algeria, the army preferred the security of the oil and gas production system.[11] The economy has been liberalized especially in the gas and oil domain, where companies are strongly investing; therefore, new pipelines have been established between Algeria and Europe. The Algerian military took the control of the country. From an economic perspective, persons near to the regime are earning hugely from the economic reformation, the generals themselves became very wealthy. Furthermore the economic reforms aid the regime to narrow the first  on society as ‘private monopolies supersede  public monopolies and are caught by those with close relations to the powerful generals , from a political perspective , the regime is capable to survive due to the series of feral  inhibition and repression,  façade democratic steps and outside help .[12]

 

3/The luck of modernization effect through cultural and social change:

 

It suggests that the oil wealth fails to create the social and cultural changes, which a democratic government demands due to some reasons:

 

An autocratic regime seeks to create loyalty through patron–client networks, which rise political stability and guarantee a certain degree of legitimacy. Such networks include the award of personal support in the format of public sector jobs and the distribution of public resources through permits, projects and contract. These activities will increase the level of corruption and decrease transparency and accountability.[14]

 

 In Algeria, the economic development was not connected to the democratization process. Part of the manifestation can be found in Algeria’s social structure. At independence, the class structure was comparatively united and combined, in the last decade; Algeria gave most of the chances for economic development.  Within a mixt elite consisting of political parties, bureaucrats, and, much of the population was attached to the state through patronage networks and the economic interests of the private sector. In addition, trade unions were strongly under governmental control. As a result, the social grounds for opposition was very tight. When compression to reform spread, it did not come from the working or middle classes but from students and religious groups.[15]

 

Therefore, The social structure in the rentier countries generally and Algeria specially is enfeeble, the social force with the powerful interest in the economic liberalization have to improve political pluralization, specifically  the bourgeoisie, however combining those most menaced by it specifically  workers, peasants and civil servants. Therefore, rentier states aimed to prevent the formation of a democratic coalition because they extremely menace the bourgeoisie, its ability leading force, and in combining the working class and peasants made them unavailable as shock troops of democratic revolution. Moreover, rent clientelist mentality and networks aimed to individualize political activity as actors look for personal wining through privileged relationship to power, therefore frittering the potential class action necessary for democratization process.[16]

 

Conclusion:

 

The article concludes that  the plenty of the oil prevents democratic transition and supports the strength and immovability  of an authoritarian system, through providing for  dictator monetary capability to repel any democratic efforts, The case study on Algerian authoritarian regime demonstrated how an tyrannical system whose economy is largely dependent on oil and gas rents acted in the political crises, therefore the Algerian example shows well how oil wealth have played a significant role in blocking the social opposition to increase through repression and patronage, therefore rent is a structural variable in explaining authoritarianism.

 

References:

 

Ljubljana, 7 April 2019

 

[1]“Algeria: the Arab World's often forgotten massive oil giant:”Albawababusiness(22 October 2013) http://www.albawaba.com/business/algeria-oil-giant-528212 visited on28-12-2016.

[2] Michael Ross,op, cit,p.183.

[3]Michael Ross, Does Taxation Lead to Representation?. (Cambridge University Press, 2014) p,234.

[4] Ahmet Kuru, Authoritarianism and Democracy in Muslim Countries: Rentier States and Regional Diffusion, POLITICAL SCIENCE QUARTERLY, file:///C:/Users/hp/Downloads/Authoritarianism_and_Democracy_in_Muslim.pdf visited on 26-12-2016.

[5] Lala Moradova,” Oil wealth and authoritarianism: Algeria in the Arab Spring. Riqueza petrolífera y autoritarismo: Argelia en la Primavera ». Revista Espanola de Ciencia Politica review · (April 2016) p. 70.

[6]Ibid, p.71.

[7] Camilla Sandbakken, “The limits to democracy posed by oil rentierstates: The cases of Algeria, Nigeria and Libya” Democratization Journal,(N.13,2006)p.140.

[8]Cyril I. Obi, Nigeria : Democracy on trial, Department of Peace and Conflict Research, the Swedish DevelopmentForum,Stockholm,(September2004). http://www.nigerianlawguru.com/articles/constitutional%20law/NIGERIA%20- v%20DEMOCRACY%20ON%20TRIAL.pdf  visited on 15-11-2016.

[9] F. Cavatorta, “Geopolitical Challenges to the Success of Democracy in North Africa: Algeria, Tunisia and

Morocco”, Democratization Journal, n.8, issue, 4, (2001).p.185.

[10] Loc.cit.

[11] F. Cavatorta,op.cit.p186.

[12]Ibid.p.187.

[13] Miriam R. Lowi, Oil rents and political breakdown in patrimonial states: Algeria in comparative perspective, The Journal of North African Studies n.9, (2004).

[14] Camilla Sandbakken, op,cit, p.141.

[15]Ibid.p.142.

[16] Raymond Hinnebusch, Authoritarian persistence, democratization theory and the Middle East: An overview and critique,the Journal of North African studies, n.1, (17 Jul 2006.) p.380.