Optimist at work in shadow of chaos

INSIDE ALGERIA

Mourad Benashenhou is a man with his work cut out. On the third floor of the Ministry of Industrial Restructuring - a plain-clothes guard on each floor, an armed policeman at the gate - he is trying to do what few dare to imagine in Algeria: to shore up a collapsing economy while his country goes up in flames.

If Mr Benashenhou is successful, he will have to be credited as the man who put the fire out and helped to save his country from destruction. "I'm an optimist," he keeps saying; which takes a lot of courage these days.

A management graduate at Maryland with a PhD in economics from Bordeaux University, he spent part of 1993 trying to reorganise public administration in post-civil war Lebanon. But his present task - liberalising Algeria's wrecked socialist economy while tens of thousands of armed Islamists tear the country apart - puts Beirut in the shade. With a total debt of $27bn, 98 per cent of its foreign currency receipts from the sale of hydrocarbons, a fall in GNP from $52bn to $45bn in six years - an 8 per cent reduction in the past three years alone - and 25 per cent unemployment, Algeria is the object of a systematic campaign of destruction against factories, railways and communications.

Eloquent, white-haired, as well he might be, and patient to the point of saintliness with cynics and doubting journalists, Mr Benashenhou insists - absolutely swears - that Algeria deserves foreign investment and international help, understanding and moral support. In emphasising the need for a liberal society - "you have your religion and I have mine," he repeats several times - he must be the first economic minister to quote from the Koran to encourage foreign investment. Yes, he admits, there is a direct link between the economic and political crisis. And yes, the "terrorists" are deliberately trying to destroy Algeria's economic infrastructure.

"The attacks on foreigners [75 of them murdered so far] were timed to coincide with the passing of our liberal laws on foreign investments," he says. "The guys on the other side of the street thought we were going to succeed in the gearing up of our economy. They wanted to stop foreigners investing. And foreigners who were investing, both directly and in partnerships, did back out. But this didn't prevent our economic policy from showing good results."

IMF debt rescheduling, according to Mr Benashenhou, means debt servicing has been reduced to $4.5bn from a potential figure of $18 bn. There has been a slight increase in industrial production and the government, so the minister says, is now fighting the corruption that has bitten deep into the economic fabric of Algeria.

"We recognise that there is a lot of corruption in the economy," he says. "I don't know what this represents in terms of volume, but we don't hide the fact that when you have an overwhelming, large public sector economy, this leads to corruption linked to political power. To fight corruption, everybody must have an equal footing in law. A lot of cases are now being pursued in the courts of justice." The minister has good reason to feel contempt for political corruption. Under Chadli Bendjadid's regime, he was hounded out of the country for daring to suggest that the President - who ruled from 1979 until the suspension of elections that the Islamic Salvation Front (FIS) would have won in 1992 - was following a ruinous Soviet-style economic policy. "Mr Chadli was deaf to any kind of advice which didn't coincide with his political interests. The views of high-level civil servants were suppressed. Mr Chadli refused dissent. There were sycophants around him. They said, `If you're against Mr Chadli, you're against socialism and if you're against socialism, you're against Algeria and you must leave the country.' I was happy to go."

It is a persuasive history, although not without its ironies. Now, of course, it is the FIS who say those who are against them are against Islam - just as government supporters will tell you that anyone who is against the security forces is against democracy. The terms change but the equation stays the same. "The FIS was a party that totally rejected the history of this country - they say that everything before the Arab period is sinful, that there is no such thing as an Algerian culture, flag or international border... The FIS worked for an anarchic rather than a liberal economy. When they won the first, municipal elections, they gave total freedom to speculators to make profits from the public purse and at the expense of people who didn't agree with them."

Mr Benashenhou's economic project seems almost Thatcherite - greater private investment in the public sector will create a greater sense of responsibility, a more stable economy, less inflation, more generous foreign loans, more diversified foreign earnings and, ergo, less social unrest.

Suggest to Mr Benashenhou that his policy is to drown violence with capitalism and he grins in almost sheepish agreement. So what does he say to foreign nations which have condemned the Algerian security forces and wish to link trade with an improvement in human rights? "Every country has the right to take whatever steps it feels necessary to combat terrorism... I haven't met anybody in my discussions with high-level foreign officials who has in any way raised with me this issue of human rights, saying `if you would do better on this front, we would be kinder to you'...The success of our economic policy will consolidate the ground for a political solution. If we don't succeed, then the kind of political evolution you will see may not be in the interests of foreign countries."

Which is a polite way of saying that the West should invest in Algeria if it does not want an Islamic republic on the southern shore of the Mediterranean.