Preliminary Remarks:

Many endogenous and exogenous initiatives encompass the reform problematique in the Arab world.

It is a recognized fact that political, economic and social reforms cannot succeed unless each country feels a national sense of ownership of these reforms and unless there is a regional and international environment conducive to these reforms.

In this light, there is no denying that the situations prevailing in the Middle East and in Iraq are serious factors of instability. Prospects for security, democracy and development in this region are predicated on the restoration of peace which itself presupposes the creation of the Palestinian State with El Qods Echarif as its capital, the recovery of Lebanese and Syrian territories still occupied by Israel and the effective exercise by the Iraqi people of all its sovereign rights.

By intensifying efforts for a fair and durable settlement of these conflicts as early as possible, the International Community would contribute to boosting dynamics of democracy and of economic and social progress in the whole region. Algeria whose fate is closely intertwined with that of the Arab world is keen to reemphasize these fundamental parameters which need to be taken in to account in order to ensure the credibility and the sustainability of any initiative of political and economic partnership directed at the Arab world. REFORMING ALGERIA: MATURRFY ANDIRRIEVIERSIBILITY Over the past fifteen years, Algeria is rebuilding itself on new foundations. The establishment and development of a democratic political system and of a market economy has already completed some important stages. The process was initiated with due regard to the lessons learnt from the previous experience of nation-building which our country acquired under the pressure of the extremely exacting historical circumstances which surrounded the recovery of our Independence.

The choice made to introduce fundamental changes in the political, economic and social fields was in no way reconsidered during by the decade of adversity that befell the Algerian people. Neither the surge of terrorism nor the misperceptions of some of our partners, nor the indifference of others weakened the resolve of Algeria to move forward. Algeria succeeded not only in safeguarding and reinforcing the democratic and republican nature of the State based on the consecration of fundamental freedoms and of Human Rights but also in conferring an irreversible character on the transformation of the system of operation and of management of the economy.

Thus, the principle of freedom was asserted. This principle underpins political and economic life today.

At the political level:

The policy of civil concord contributed to the restoration of security and to a return to the age-old values of tolerance and dialogue characteristic of the Algerian people, thus broadening continuously the scope for freedoms.

The consecration of Tamazight elevated to become a national language and the resolve of the Authorities to enhance and propagate it, spring from an approach aiming at getting the Algerian people to close ranks while fostering a blossoming of all the facets of its culture and civilization, at one and the same time.

This new context undeniably facilitated the resort by the Algerian people to its sovereign right to choose its representatives at all levels through free and transparent general elections.

The parliamentary and local elections of 2002 and the recent presidential elections demonstrate that Algeria is now durably engaged in the era of democratic legitimacy of the Public Authorities.

The two-Chamber Parliament wherein different political perceptions existing in the country are represented, freely exercises its constitutional prerogatives.

The absence of any constraint on the creation of press organs and on the dissemination of their publications, free of censorship, has spawned a plurality of newspapers and a diversity in views expressed.

It remains for the Public Authorities and for the media to join in upholding the blossoming of this freedom of expression while shielding it from excesses which are condoned nowhere in the world. It is within this context that the Government is working on the elaboration of appropriate legislation incorporating the non-ns applied to media activities in countries of the OECD.

The enhancement and protection of Human Rights are addressed through a comprehensive framework involving parliamentary, judicial and NGO mechanisms. Furthermore, having adhered to all the international instruments relating to Human Rights, Algeria is intent on scrupulously fulfilling the resulting obligations there from. Freedom of association brought forth a large number of non-governmental organizations that are active in all fields of social endeavor.

One can say today that in achieving a synthesis between universal democratic principles and the values defining its own culture and civilization, Algeria has shaped a political system responsive to the requirements of modernity and to the need for this system to be rooted in Algerian society. It expresses thereby its resolve to participate in the global democratic upsurge and to contribute to the restoration of the values supportive of human dignity and respect worldwide.

Finally, in compliance with the relevant clauses of the Association Agreement with the European Union and with the implications of its membership of the NEPAD "Peer Review Mechanism", Algeria has established respect for Human Rights, democratic freedoms and good governance as paramount components of the re-sourcing of the State and regards these as obligations which the Authorities commit themselves to honor not only toward the Algerian people but also toward the International Community.

At the same time, Algeria, which is recovering from its national crisis more determined than ever to partake in the global fight against the scourge of terrorism, now remains intent on addressing the after-effects of the crisis with respect to:

-The transparent handling of the case of the disappeared during the crisis; _The encouragement of those among the terrorist groups operating inside the country to renounce resorting to murder; -The promotion of all-embracing national reconciliation through which Algerian society will preserve its national unity with political diversity and will engage on the modernization of the country while avoiding any form of extremism.

At the economic level:

Admittedly economic reforms are behind schedule in Algeria. They were started for the most part during the painful phase of structural adjustment carrying in its fold the freeing of prices which has today been all but achieved, the closing down of public enterprises (over 400) with the attendant staff lay-offs (over 400,000 between 1995 and 1997).

But this painful experience has not deterred Algeria from proceeding apace with economic reform. This is born out by the conclusion of an Agreement of Association with the European Union leading to a free-trade area. It is also born out by the resolute pursuit of the negotiation to join the WTO for which Algeria expects support from its partners.

Simultaneously with this option, Algeria is proceeding with the required internal transformations and adaptations.

Thus, the final stage of review of laws to adapt them to the market economy will soon be reached.

In the same vein, readiness for, and encouragement of, partnerships and of private national or foreign investment are beginning to bear fruit. An illustration of this is the total of over 6 billion dollars in private domestic investment and of over 10 billion dollars of foreign direct investment, which have taken place over the last five years. The private sector currently accounts for over 50% of the volume of imports of the country and for over 2/3 of the growth-rate outside oil and gas.

Reform also encompasses the service sector, be it communications or banking (cited as example), the process being albeit still in need of fine-tuning.

Finally, Algeria is aware that economic reform must necessarily undergo a phase of transition. It accordingly pairs this opening-up with a State-sponsored effort to support development and growth, an effort, which will be relayed increasingly by private capital. Thus, close to 30 billion dollars in investments were contributed from public sources over the past five years. This effort will be maintained during the five forthcoming years, providing attractive opportunities for domestic as well as foreign investment. THE NEW STAGE: STRATEGIC CONTINUITY AND REINFORCEDIMPLEMENTATION METHODS National reconciliation, stability, democracy, economic development and social cohesion remain inseparable components of the undertaking of national renewal under completion. In order to reach its goals under optimal circumstances, Algeria set itself 6 priority objectives for the attainment of which it is devoting sustained efforts:

First objective: Reforming the Judiciary and bolstering the Rule of Law

Bolstering the Rule of Law is a must in order to improve the protection of Human Rights and to enhance the security of people, of property and of economic activity. The reform of the Judiciary is already well under way. It is in need of being completed because the judicial system is the kingpin of the Rule of Law.

This involves: a) Reinforcing the independence and the credibility of the judicial system; b) Making this system accessible, expeditious in dealing with disputes and in the implementation of its decisions; c) Completing the process of harmonization of Algerian legislation aimed at ensuring compliance with international commitments; d) Reinforcing the training of magistrates and enhancing the physical capacity of the judicial and penitentiary networks.

Second objective: Pursuing the structural reform of the State and the reform of its missions

This reform aims at no less than providing new foundations for the State to enable it to address the new requirements resulting from the political, economic and social mutations that Algeria is undergoing. The reform was launched two years ago and constitutes one of the priority objectives of the current quinquennium.

This reform has an all-encompassing purview, being intended to provide the Civil Service with appropriate instruments and adequate means to provide efficient support to the democratic process, to ensure that good governance is firmly rooted and to modernize the economy and disseminate social progress.

The process under way, therefore, has the ambition to redefine the very nature of relations between the State, society and the economic sphere as well as to generalize participatory forms of management at all levels.

The fundamental objective is to see to it that the citizen is not just a taxpayer but also a full-fledged associate in the management of public affairs.

While reinforcing its arbitral and regulatory prerogatives and optimizing the conditions under which they are being exercised, the State intends also to concentrate its action increasingly on the factors which underpin economic growth, the creation of jobs and the improvement in the conditions of living of the population.

Through this effort to achieve the renewal of the institutional and administrative frameworks, the Public Authorities express their resolve to rise to their responsibilities as regards anticipation, design, action, evaluation and control.

The reform of the institutions and prerogatives of the State also aims at further enhancing deconcentration and decentralization through an effective redistribution of prerogatives and resources in favor of local authorities which are, par excellence, the level at which one can ascertain daily the representativeness and the credibility of the State, while being at the same time the expression of an authentic form of local democracy.

Third objective: Developing a partnership between the State, the Private Sector and Civil Society.

Algeria, which has opted for an approach to development centered on people as both actors and beneficiaries, has undertaken to promote the broadest possible degree of participation from the design to the implementation stage.

The frameworks for bilateral dialogue between the Government and Trade Unions and for trilateral dialogue also involving employers have brought about a healthy tradition of dialogue on the economic and social management of the country. They contribute to the necessary balance between the requirements of economic efficiency and those of social equity.

Our objective is to reinforce this dialogue in order to arrive at a medium-term economic and social pact, which would seat a true partnership between the Government, the Trade Union Movement and employers.

The State is also engaged in fostering the qualitative development of the NGO movement, in particular by encouraging its institutionalization at the national level and by enhancing its capacities with a view to empowering it to make a greater contribution to economic, social and cultural processes which have to do with the life of the Nation.

The State is also keen on providing impetus to the emergence of appropriate frameworks for dialogue and consultation at the local level.

Fourth objective Reforming the Family Code

The status of the Algerian woman is characterized by the equality of rights and duties with men in the political, economic, educational and cultural spheres. This equality has made it possible to ensure the massive registration of girls at all levels of learning, an increasing access of women to professional life, to political and economic responsibilities as well as to senior levels of the civil service and of the judiciary.

Thus, in addition to the right to vote and to equal pay which were introduced since Independence and to cite only these examples, women account for over 50% of university staff, 60% of medical staff, more than 30% of judges and over 55% of journalists.

This trend will be crowned in a few months by the introduction in the Family Law of new provisions aimed at balancing the rights and duties of both spouses to make them comply with the Constitution, our international commitments and with the values, which underpin our civilization.

Fifth objective Pursuing educational reforms

Algeria is aware of the fact that upgrading human capital is the very basis of political, economic and social progress. Since its Independence, it has therefore devoted substantial investments to generalizing access to education and training.

The country is currently introducing a qualitative transformation of its educational system to address the needs related to preparing its children for citizen involvement and to enhance their creative potential in the context of an economy, which is increasingly knowledge-based.

This reform aims first at providing the material and teaching requirements which are best suited to addressing the needs of 8 million school-goers (which is 25% of the population) and of close to 1 million students. It is in this context that the contribution of private schools and of foreign universities in Algeria was legalized last year.

The reform of the educational system also aims at giving it exposure to universal science and culture, to foreign languages and to international cooperation. It also relates to enhancing those features, which determine our national identity from a perspective, which is in harmony with modernity and development.

Sixth objective Deepening economic and financial reforms

The bold economic and financial policy implemented unflinchingly by Algeria in recent years has made it possible to give vigor and consistency to the choices relating to the allocation of budgetary resources and to their management.

It has made it possible to devise incentive and supportive instruments to benefit private initiative, involving youths inter alia , in a way that is conducive to the emergence of a new class of entrepreneurs.

The pursuit of reforms will concentrate henceforth on the modernization of the financial and banking sector so as to enable it to play fully its role in the financing of the economy, in increasingly rationalizing the management of public finance, in pursuing an active management of the debt, in providing for the development of the private sector as well as in accelerating the process of opening up public sector enterprises to partnerships and to privatization.

A central objective of the reform strategy is to diversify the scope of industrial and agricultural as well as of the service sectors, so as to reduce dependence, which remains excessive, on oil and gas.

Constraints to be overcome and directions for the establishment of appropriate partnerships.


The success of an all-encompassing process of reforms such as that on which Algeria is embarking is predicated on the elimination of many endogenous constraints such as capacity inadequacies and of exogenous ones such as the overestimation of the Algerian risk.

Another specific constraint, which is no less important, has to do with the far-reaching after-effects of a decade of terrorism which continue to impact budgetary parameters and human resources required for our growth and development process. Nor did natural calamities spare Algeria during these last decades. Indeed after a long period of drought, devastating floods followed, as well as earthquakes, resulting in losses of human lives and in very extensive material damage, as was the case for the earthquake of May 21, 2003. To make matters worse, Algeria is now confronted with a woeful locust invasion.

One should also take into account difficulties inherent to the conduct of any broad-based transformation process.

These constraints should be assessed and addressed in light of the challenges posed by early deadlines relating to the entry into effectiveness of the Association Agreement with the European Union and to our accession to WTO membership.

For instance, the development effort under way in Algeria and the after-effects of the serious crisis that it endured must be taken into account when determining its eligibility to external development assistance. It would be inequitable to determine this eligibility by mere reference to its national income, which in any event still remains fragile.

Another instance relates to the impact of a very large opening of its economy to the outside world, which would expose Algeria to serious risks of fraudulent capital flight through private banking channels or through fraudulent customs declarations. More active international cooperation is therefore required to eradicate these scourges. As a matter of fact, appropriate international mechanisms already exist for this purpose but are just in need of more efficient implementation.

Likewise the International Community needs to redress the injustice relating to the Algerian risk. This is all the more justified since the difficulties encountered by our country have not only been overcome but result in effect from its fight against terrorism, a fight it has engaged for its benefit and for the benefit of others, and one in which it is indeed at present a loyal and effective partner at the international level.

A partnership for capacity building in design, implementation and follow-up

This partnership is called for to increase the effectiveness of the role of the civil service, the judiciary, the educational system, the private sector and civil society.

State institutions will thus be revitalized, becoming truly instrumental to the pursuit of the objective of fostering investment, as well as able to exercise effectively their prerogatives to regulate the economy and to improve the quality of public services.

The Judiciary for its part is deserving of a special effort in terms of training and recycling of judges including in the field of corporate law, so as to bolster the Rule of Law and the legal and penal protection of investments.

Partnership in the educational field should focus on the following directions:

-Raising the quality of university level teaching as well as of technical and vocational training; -Supporting centers of excellence and joint research programs;-supporting the design and edition of school books; -Backing up the introduction of new information technologies in teaching.

Partnership for capacity building in the private sector

The Algerian State has set itself the objective of assisting in the creation of 100,000 private enterprises over the coming five years. This effort as well as the upgrading of the management capacities of existing enterprises and the integration of the informal sector are in need of support in terms of training and expertise aimed at better mastering the project cycle and in terms of the organization and management of enterprises. Reinforcing civil society also means providing it support for organizational and technical capacity building and as well as to optimize its contribution to the development process.

Developing partnerships to promote investment and to integrate the Algerian economy into the global economy:

The over-estimation of the Algerian risk can no more be justified by political factors or by the safety argument or by economic and financial data.

Algeria, which has restored security, stability, credit worthiness, economic growth, and convertibility on current account, elicits all the features of an environment that is predictable, safe and attractive for the expansion of foreign direct investment.

The country enjoys other amenities such as competitive transaction costs, whether this has to do with the quality of its infrastructure, the abundance of its manpower which is both qualified and low-cost, the availability of energy and of other utilities at a reduced cost, with an incentive fiscal system or with a rapidly expanding market.

The over-estimation of risk therefore applies a break on the Algerian economy penalizing it as well as the entrepreneurs wishing to invest in the country.

We expect our G-8 partners to contribute to a correct perception of the political and economic reality prevailing in Algeria and of the far-reaching opportunities it affords investment.

The priority of partnership action should also focus on the restructuring and the up grading of the production system in order for it to integrate the global economy under the best terms. The pace of such integration is likely to accelerate in the future following the implementation of the Association Agreement with the European Union and Algerian membership of WTO.

Beyond contributing to building our country's future, the multi-faceted reforms under way are quite obviously of relevance to the evolution of the geopolitical areas to which Algeria belongs. This is tantamount to saying that the stakes extend beyond our national borders, implying a more sustained commitment, and a renovated cooperation from our partners.




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