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Algeria on the brink as pandemic and low oil price take their toll

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Standing in front of a bank in Algiers, Slimane pulled out gold necklaces and rings from a bag, his wife’s jewellery, which he hoped to use as collateral for a loan.

During the pandemic, the 46-year-old businessman had to shut down his small company designing and producing publicity material and let go of his four full-time workers.

“It was very hard. It felt like the sky fell on my head,” said Slimane, who did not want his full name to be published. “The pandemic has forced companies to reduce business or shut down completely especially in the travel sector on which I relied for clients. My wife asked me to pawn her gold jewellery so we can start a grocery shop in our neighbourhood.”

The coronavirus pandemic has hit Algerians hard, exacerbating the woes of a state-dominated economy already scarred by years of falling oil prices and curbs on local and foreign investment.

Even before the pandemic, just under a third of Algerian youth were unemployed and many had hoped for change after the huge protests that led to the overthrow of President Abdelaziz Bouteflika in 2019.

But with an undiversified economy, which relies solely on oil and gas exports, and depleting foreign currency reserves, Algeria could soon face economic disaster, analysts warn. Few believe politicians can deliver meaningful change, a fact made clear by the low turnout at last weekend’s elections. For the military-backed regime, analysts say, the parliamentary poll, the first since the protests, allowed it to project democratic renewal, while any resulting coalition government of independents and pro-regime parties is unlikely to rock the status quo.

“The economic trend is extremely negative,” said Riccardo Fabiani, north Africa director at the International Crisis Group, a conflict resolution organisation. “There is a liquidity crisis at banks and local companies. In construction, the biggest sector after oil, there has been a record number of bankruptcies. The country could be heading towards economic disaster with a heavy social cost.”

Volunteers serve meals to poor families at a charity centre in Algiers
Volunteers serve meals to poor families at a charity centre in Algiers © Ryad Kramdi/AFP via Getty Images

The economy shrank 6 per cent last year, according to the IMF which projects 2.9 per cent growth in 2021 on the back of higher oil prices. It forecasts a budget deficit of 18.4 per cent of gross domestic product in 2021. To balance its budget, the lender said Algeria needed an oil price of $169.6 per barrel, more than twice the current price of $72. However, analysts say, there is no clarity on how the regime plans to pre-empt a potential economic catastrophe.

“Politicians say they want to open up the economy and to diversify,” said Mabrouk Aib, a university lecturer and public policy analyst in Algeria. “They want a lot of things. That is what they claim, but actually we do not know if they have a clear strategy of how they are going to implement this.” 

Even as falling oil prices in recent years have squeezed government finances and limited its ability to offer handouts and create jobs for its predominantly young population, Algeria’s military decision makers, or decideurs as they are known, have failed to diversify the economy. Instead, successive governments have been burning through foreign currency reserves, which sank from $200bn in 2014 to $47bn in 2020. 

The military, which has traditionally controlled key decisions since independence from France in 1962, has been reluctant to introduce reforms that would unshackle the private sector, incentivise investments and bring transparency to an economic system built on a web of vested interests and clientelism fuelled by petrodollars. Under Bouteflika, a crony capitalist private-sector was allowed to thrive that benefited from political patronage and government largesse. Many of these businessmen are now in prison on corruption charges and some of their companies have been taken over by the state. 

Given its lack of foreign debt and a rising oil price, the Algerian regime could still buy “a year or two”, Fabiani noted. It could resort to bilateral borrowing from China or the Gulf. Abdelmadjid Tebboune, the president, last year ruled out a loan from the IMF, suggesting it would constrain the country’s ability to have an independent foreign policy. “The big question remains, what is the new government going to do,” said Fabiani. “Will they come up with any new ideas?”

Already, rising prices have sparked repeated demands for salary increases and strikes by different sectors of society, from teachers to doctors to postal workers. Firefighters protested in full uniform last month and were dispersed by police using tear gas.

Wary of protests, authorities cracked down in the run-up to the election, preventing marches by the country’s pro-democracy movement that ousted Bouteflika in 2019 and flooding central Algiers with police cars. More than 200 people are in prison in connection with protests.

The authorities may stifle dissent but they are well aware that living conditions are increasingly harsh for Algerians suffering under the combined impact of lockdowns, business closures and inflation.

“I have a family of seven to support, but the construction company for which I worked has shut down,” said Samir Yefsa, an unemployed 50-year-old. “The state was our only client, but the government now has no construction programme. I don’t know what to do. I have problems feeding my family. I can only borrow from family and friends who are retired and live on pensions, because others who are younger are in a situation similar to mine.”

At a market in Algiers, Naima, a primary school teacher complained of price increases and the erosion of her purchasing power. “I swear to you I have not bought fruit for my children for two months,” she said. “There are certain items now that are just too expensive for those on middle or small incomes.”



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'It’s more than sport – every day we are fighting for our rights to be equal’

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French pro basketball player and podcaster Diandra Tchatchouang on her role beyond the court



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Emily Dean on how allyship amplifies the female experience on film

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When I was six years old, I decided to be an artist. When I was 12, I decided to be a filmmaker. And instead of saying no, you can’t do that, or it’s not possible, my mum bought me a video camera.

After several years of working in the industry, I’m working with a female director for the first time. And it’s been such a gratifying experience. Women express leadership in different ways. Maybe you don’t have to be the loudest person in the room. But you can have great ideas.

And the best thing about being mentored by women and being a mentor to women is that make friends with women.

There’s something so powerful the women coming alongside other women, especially in a group setting. Because it means that you can and back each other up. You can support each other’s decisions, and you can amplify each other’s voices.

It’s about seeing yourself in your work. Seeing some part of yourself reflected is really gratifying. It’s also important that we speak up for female characters. I want to see girls and women on screen who have the whole cacophony of experience of what it’s like to be female.

I want to see their flaws. I want to feel their struggles. I want to see their joy. That is so important to making a character feel real. And it took me a little while to settle into myself and realise, if the characters I like to come up with are not your everyday run of the mill characters you see in animation, that’s fine. Because this is who I am.

When you walk into a story room, when you’re working on a film, you have to leave your ego at the door. I think that can be interpreted like keep your ego out of the work. But I’d also say for women who are maybe more shy that leaving your ego at the door means you walk in. And your job is to focus on what’s best for the story and for the film.

The story needs you. The film needs you, and it needs your best ideas. It won’t thrive unless you speak up.



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Crimea ‘water war’ opens new front in Russia-Ukraine conflict

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When a cyclone drenched Crimea in rainfall last month, rivers burst their banks and thousands of people in the Russia-annexed peninsula had to be evacuated from the floods.

The silver lining to the deluge was that the rains also filled Crimea’s depleted reservoirs, temporarily alleviating a crisis brought on by an extended drought and a Ukrainian blockade of the Soviet-built canal that previously provided up to 85 per cent of the peninsula’s water supplies.

Moscow’s struggle to supply Crimea’s 2.4m residents with fresh water has become a flashpoint in an undeclared war, seven years after Russian troops seized Crimea from Ukraine. An even longer conflict between Kyiv and Russian-backed separatists in eastern Ukraine has claimed more than 14,000 lives.

Russia has accused Ukraine of “genocide” over the building of a concrete dam across the North Crimean Canal, in addition to the existing sandbag and earth dam that was built in 2014. Kyiv fears that Moscow is plotting a military incursion to secure water flows from the nearby Dnipro river.

Coupled with surging food prices and international isolation because of western sanctions, the water shortages threaten to undermine President Vladimir Putin’s promise of a better life for Crimeans under Russian rule.

Though state-run pollsters claim Putin remains more popular in Crimea than on average across Russia, the patriotic fervour that sent his approval ratings to record levels after the 2014 annexation has long since subsided.

Map showing Ukraine and the North Crimean Canal, Crimea

“The water reserves and fields have dried up,” said Viktor, 47, a Crimean who regularly travels to Ukraine for work. “Each year it’s getting worse and worse. We didn’t have this problem before annexation,” he said, adding that most Crimeans blamed Ukraine for the crisis.

A $3.7bn bridge across the Kerch Strait linking Crimea with mainland Russia has become a conduit for trucks ferrying water for locals to take away in plastic containers. Popular Black Sea tourist resorts can turn on their taps for just a few hours a day during peak droughts, while the canal has filled with grass and weeds.

Crimea’s agricultural output has fallen owing to a lack of irrigation, making it all but impossible to grow water-intensive crops such as rice.

Construction of the canal began in 1957 after the Soviet Union transferred the arid peninsula to the Ukrainian Soviet Socialist Republic to manage rebuilding after the second world war. The waterway allowed for the cultivation of arable land and helped transform Crimea into a haven for tourists.

“The canal symbolises the stupidity of the Kremlin in occupying Crimea. They didn’t weigh the consequences at a moment of electoral euphoria that was fed by their own propaganda,” said Oleksiy Reznikov, Ukraine’s deputy prime minister in charge of reintegration policies for the occupied territories.

“Why didn’t you think about water?” he asked.

The North Crimean Canal is seen with a low level of water
The severely depleted North Crimean Canal previously provided up to 85% of the peninsula’s water supplies © Pierre Crom/Getty

Workers collect potatoes on the North Crimean Canal
Workers collect potatoes on the North Crimean Canal. Ukraine blocked the irrigation channel after Russia’s 2014 annexation of Crimea © Pierre Crom/Getty

Russia, while pressing Ukraine to reopen the waterway, has launched a Rbs50bn ($680m) programme to bolster Crimea’s supplies, repairing crumbling infrastructure, drilling wells, adding storage and desalination capacity.

Russian prosecutors last week filed a lawsuit in the European Court of Human Rights accusing Ukraine of “flagrant violations” over the issue. Crimea’s governor plans to file a separate complaint demanding up to Rbs1.5tn in compensation.

“Kyiv has essentially used Crimea’s infrastructure dependence on Ukraine, which came about in the Soviet era, as a weapon of mass destruction against all Crimeans. The water blockade is an act of state terrorism and ecocide, but the international community is failing to notice the Kyiv regime’s crimes,” Sergei Aksyonov, the peninsula’s governor, said in written comments to the Financial Times.

Reznikov said Russia, as the occupation force, was responsible under the Geneva Conventions for securing water and other basic needs for local the population. Ukraine has filed its own multi-billion-dollar claims against Russia, citing losses caused by what it describes as an illegal land grab.

With tensions rising, Russia deployed tens of thousands of troops and advanced weapons to Crimea this spring, as well as to the border of the two breakaway eastern regions where Moscow-backed separatists have battled government troops into an eighth year.

Col Kyrylo Budanov, chief of Ukraine’s army intelligence unit, said Russia was looking to seize the canal as well as adjacent territory to connect Crimea with the breakaway regions. Russian troops could advance on Nova Kakhovka, the Dnipro river town where the canal begins.

Some Crimean Tatars, an indigenous ethnic group whose members largely opposed Russia’s annexation, have set up a makeshift camp near the dams to make sure the water flow does not resume.

A Crimean Tatar activist on the North Crimean Canal
A Crimean Tatar activist enters his base on the North Crimean Canal. Tatars have set up camp to make sure the water flow does not resume © Pierre Crom/Getty

A Ukraine military vehicle drives past a Soviet monument marking the entrance to Brylivka
A Ukraine military vehicle drives past a Soviet monument marking the entrance to Brylivka, a village on the North Crimean Canal © Pierre Crom/Getty

“It will be a full-scale war,” said a 55-year-old activist who gave his name as Alibaba. He said he and his fellow activists were willing to take up arms to defend the blockaded canal. “There will be nowhere to hide in these fields. Let them try,” he added.

At the Kalanchak border crossing near the new dam, Russian and Ukrainian troops have dug trench positions a few hundred meters apart.

Tensions have also flared in the Black Sea, not just with Ukraine but also with western navies. Russia fired warning shots in the path of a British destroyer sailing through contested waters off Crimea last month. Sevastopol, Crimea’s largest city, is home to Russia’s Black Sea fleet.

Moscow has insisted it would not go to war over Crimea’s water supplies, even as it conceded that Ukraine was unlikely to restore them. “All these hysterical statements from Ukrainian politicians are completely baseless — they’re just stupid, aggressive propaganda aimed at inciting hatred between the Russian and Ukrainian people. There won’t be any ‘water war’,” Crimea governor Aksyonov said.

Reznikov, the Ukrainian minister, said Kyiv was ready to provide Crimea with humanitarian assistance, including drinking water, which it already does for the separatist-run eastern territories, but no request had been made.

“For Russia to admit they’re weak is very difficult . . . it would amount to an admission that they made the wrong decision,” he said.



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