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Algeria Offers
Business Opportunities for The US
Private Sector-The US- Algeria Business
Council
Plays Key Trade Facilitating Role
Washington File, By Phil Kurata
April 12, 2005
Washington, DC-- The
U.S.-Algeria Business Council is working
to bring U.S. investment and trade to
Algeria to bolster Algerian President
Abdelaziz Bouteflika's strategic
decision to integrate his country into
the global economy.
In an interview with the Washington
File, council president and chief
executive officer Ismael Chikhoune said
Bouteflika's efforts to defeat terrorism
and promote reconciliation are showing
results.
"It's becoming stable. They (the
Algerian government) are pushing
reforms. They are privatizing a lot of
public companies that the government
cannot handle anymore," Chikhoune said.
"So that is why there is a desire to
move to an open economy. We can
definitely say now that Algeria is open
for business."
The operations director of the council,
Elisabeth Lord Stuart, says Bouteflika
deserves credit for leading Algeria out
of civil war into the beginning of a new
era of budding democracy and open
markets.
" Algeria is a success story in the Arab
world. You've got a country that faced
civil war, external and internal
terrorism for years. They were shut out
to the outside world," Stuart said.
"It's a country that has cooperated with
the U.S. government on all levels,
militarily, politically and
economically. It's a time for Algeria to
play a new role in the region, something
that Bouteflika is pushing forward."
Bouteflika became president of Algeria
in an election in 1999 with backing from
the military and ruling FLN (Front de
Liberation Nationale) party. Several
months after assuming power, he won
overwhelming endorsement in a referendum
for a reconciliation plan that granted
amnesty for thousands of Islamists.
Since then, the level of violence has
declined markedly and Bouteflika has
been credited for transforming Algeria's
international image. In 2004, Bouteflika
won re-election for a second five-year
term, and monitors from the European
Union said the balloting was free and
fair. He was one of several Arab leaders
invited to the Group of Eight Sea Island
Summit in Georgia in 2004. (The G8
nations are Canada, France, Germany,
Italy, Japan, the United Kingdom, the
United States and Russia.)
Diversification and privatization have
been key themes in Bouteflika's economic
policies. His government has made it
clear that it will no longer support
loss-making public companies. Chikhoune
says the Algerian government has put up
about 1,200 companies for sale and about
350 have been sold off.
One company that the government will not
privatize is Algeria's largest,
Sonatrach, the national oil and gas
monopoly, which employs tens of
thousands of people, Chikhoune said. "Bouteflika
has put forward a clear strategy of
diversification, developing other
industries, to get the attention off
Sonatrach," Stuart said.
Algeria has accumulated a large foreign
reserve surplus as a result of rising
energy prices, enabling it to embark on
a massive economic modernization
campaign. " Algeria has money. It plans
to spend $60 billion in the next five
years. Spending $12 billion per year is
going to attract a lot of business,"
said Stuart. "Its spending calculations
were based on the price of oil at $19
per barrel. Now the price is in the
mid-$50 range."
The JP Morgan investment bank said
Algeria's foreign exchange reserves
totaled $43 billion in February,
dramatically above its external debt of
$23 billion.
To publicize the business opportunities
to Algerian and American businesses, the
council has held a number of symposiums,
conferences and other trade-related
events in the last six months. In
February, the council organized a
symposium in New York on privatization
of the Algerian banking sector, which is
needed to finance international trade
and investment deals. In late March and
early April, the council put together a
conference in Houston, Texas, to discuss
projects related to Algeria's energy and
water resources. The council will also
participate in the American pavilion at
the International Trade Fair in Algiers
in early June.
Chikhoune said the council is playing a
role in rebuilding Algeria's agriculture
by helping to improve the quality of
fruits and vegetables in the country.
The council introduced the California
Green Valley company to Algerian
partners and formed a joint venture
called Agrinput, which is bringing new
seeds, equipment and knowledge to
Algeria. One offshoot of this venture
involved sending five Algerian farmers
to California in March 2004 to learn
strawberry cultivation at one of the
biggest strawberry producers in the
world. When the farmers returned to
Algeria, they went to different areas of
the country where they trained more
people in strawberry production.
Agrinput plans to export strawberries to
Morocco, Spain and Egypt. Transport
systems to deliver the strawberries are
being introduced as a result of this
project. " California and Algeria have
the same climate," Chikhoune said. "This
is part of the politics of
privatization."
The council also has been involved with
a company called Portek, which aims to
modernize the port systems in Bejaia, in
eastern Algeria, Chikhoune said. A U.S.
government agency, the Overseas Private
Investment Corporation (OPIC), is
financing this project, as well as work
at the Hamma desalination plant, which
is expected to provide 25 percent of
Algiers’ freshwater needs when it is
completed.
Chikhoune said the Northrop-Grumann
Corporation, known primarily for its
defense-related work, plans to invest in
health care in Algeria in cooperation
with Johns Hopkins Hospital of
Baltimore, Maryland. He said Northrop-Grumann
and Johns Hopkins are engaged in
discussions with Algerian partners about
building a modern hospital in Algiers,
which would be a regional medical
center.
U.S. government officials from the
Export-Import Bank and OPIC have
endorsed Algeria as an attractive target
for U.S. investment. Algeria completed a
Trade and Investment Framework Agreement
with the United States in 2001, and the
U.S. government is advising Algeria
about accession to the World Trade
Organization, one of the goals of the
Bouteflika government.
(The Washington File is a product of the
Bureau of International Information
Programs, U.S. Department of State. Web
site:
http://usinfo.state.gov)
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