Leading Article: The new battle of Algiers

FRANCE is in mourning for the five victims of a terrorist attack on its embassy in Algiers, but the tragedy enveloping the Algerian people could soon become a crisis for the whole European Union. The collapse of the Algerian state could usher in a violent Islamic regime hostile to the West and set off a civil war which might destabilise north Africa and send thousands fleeing across the Mediterranean.

Algeria's descent into bankrupt anarchy is a dreadful lesson in lost opportunities. In 1962 the country won independence from France at the end of an anti-colonial war that cost a million lives. The National Liberation Front, or FLN, inherited a nation caught in poverty but blessed with enormous resources of oil and natural gas. It imitated the economies of Eastern Europe and pursued its own continuous internal purges. Its status among Third World nations was high.

In the Seventies, the rise in oil prices raised state revenues more than fivefold. But corruption flourished in the state sector and political renewal was stifled by the secret police. Then the price of oil collapsed from dollars 30 a barrel to dollars 10. During the Eighties, urban unemployment soared. It is now at least 25 per cent. Among men under 23 it is 70 per cent. The government borrowed on international markets, striving to stave off collapse without initiating reform. Algeria was left with dollars 26bn in foreign debt. Servicing this sum consumed more than two-thirds of its annual revenues. Riots, strikes and demonstrations broke out.

Too late, the regime began to liberalise. But among many of Algeria's 26 million people the call of Islam had replaced the dusty rhetoric of Arab nationalism. The religious militants became known as integristes for their fervent virtue. Their party, the Front Islamique de Salut, or FIS, gained support among petit-bourgeois shopkeepers and among the swelling masses of the urban poor. The FIS leader, Abbasi Madani, promised to solve unemployment by banning women from work. A woman, he said, need only leave her home 'when she is born, when she is married and when she goes to the cemetery'.

The FIS was bitterly opposed by Algeria's professional middle classes. It was unpopular among the Kabyle and Chaouia Berber minorities, who make up 30 per cent of the population. But by February 1992, the FIS was ready to claim victory in a second round of general elections. The army stepped in, called off the elections and began a campaign of repression. The French Foreign Minister applauded this action and most other countries maintained an embarrassed silence.

Now the Islamic underground slaughters intellectuals, civil servants and women who offend their pious sensitivities. The raid on the French Embassy was the latest attack on foreigners. The regime responds with mass arrests, torture and executions. The economy is moribund, the political process paralysed.

The only way out for Algeria is a dialogue between the saner members of the armed forces and any leaders of the FIS ready to talk to them. Algerian debt must be frozen at once and generous economic aid made conditional on free elections. France, with her complex historical ties to the country, cannot be left alone to intervene. The United States and the European Union should open an initiative at once. 'Don't wait for the Last Judgement,' the French-Algerian writer Albert Camus once wrote. 'It takes place every day.'