On September 6 and September 8, 2007, the al-Qaeda Organization in the Islamic Maghreb (AOIM) conducted two terrorist attacks, which killed over 50 people and injured more than 120 Algerians (Terrorist Attack, Terrorist Attack). Last week’s attacks raise several important issues of concern for the North African energy-rich country.
The past year and a half has been highly profitable for Algeria, having signed numerous foreign investment contracts in the oil and gas industry, as well as moving forward with other development plans. The tourism industry has also reached record-breaking numbers in 2006 and in the first half of 2007. Therefore, it is no surprise that the AOIM would seek to sabotage the Democratic and Popular Republic of Algeria’s economic initiatives at the peak of its economic performance.
• Although we do not believe AOIM attacks will greatly impact Algeria’s economic growth in the oil and gas industry and other developmental sectors, we are concerned over their potential to negatively impact Algeria’s tourism industry in the near to mid-term.
• We believe the AOIM is recentralizing its power and influence after suffering from recent fragmentation within the organization. The attacks last week were largely an effort to demonstrate the group’s rejuvenated capabilities and realign its intentions with the al-Qaeda network.
Booming Oil And Gas Economy Not That Threatened
Algeria is gradually recovering from a civil war in the early to mid 1990s. As a state of normalcy began to resurface in Algeria, tourists, entrepreneurs, and foreign investors began to play a large role in rebuilding and reshaping its economic landscape.
For instance, Algeria’s oil and gas giant, Sonatrach, has been the center of several economic cooperation contracts to include Spain, France, and Italy. High oil prices have been bringing economic stability and potential prosperity to the Algerians, while the government initiated a US$60 billion program to improve infrastructure, housing, education and jobs training.
However, it is important to note that Algeria’s economy has been steadily growing despite the increasing number of terrorist attacks in recent months. Investors are becoming more aware of the long-term presence of a terrorist threat in Algeria and North Africa, at large however, have remained willing to continue with their investment plans.
Al-Qaeda-Style Attacks May Hurt Tourism
As for tourism, this may not be the case for the long-term. Although the number of tourists visiting Algeria rose dramatically over the past year and a half, even in the face of increased terror attacks, we believe this was largely because the majority of these attacks were conducted in the remote mountain regions and largely targeted security and police forces. Attacks such as the one conducted on April 11, 2007, when 23 individuals were killed and 160 injured, have not been as pervasive and have not deterred tourists from visiting the country . However, last Thursday’s first ever-human suicide attack in Algeria, may potentially damage the rate of foreign, especially Western, visitors.
Though the group released a statement clarifying that the target of the attack was meant to be President Bouteflika, the 15-year-old suicide bomber prematurely detonated in the crowd when he saw that the target was too difficult to reach.
We believe the AOIM will continue to use clear al-Qaeda-style attacks, such as human suicide bombers, to deter Westerns, as well as destabilize the Algerian economy in the foreseeable future.