July 13, 2012
TSG IntelBrief: Algeria: The Rising Storm of Turmoil
As of mid-July 2012, recent reporting on the Algerian government's efforts against al Qaeda in the Islamic Maghreb (AQIM) has highlighted marked success against the terrorist group. This achievement is reflected in AQIM's diminished numbers and its inability to conduct attacks in the capital of Algiers and other major cities. What remains less understood, however, are the chronic effects of the unique and shifting topography of instability both inside Algeria and its unstable neighbors to the east and south; Algeria's economic dependency on its oil and natural gas exports; and how both of these facts are interrelated with Algeria's position as the third largest natural gas supplier to the European Union (as well as a significant supplier of crude oil to the United States). Further, recent reporting also does not properly highlight the geostrategic reality that, while AQIM might indeed need high-casualty and high-profile attacks to attract publicity and therefore regain its notoriety, it really only needs to feed off the instability in the south and east in order to disrupt oil and gas production and therefore regain its status as a major threat to the country.
In the Center of the Storm
Algeria is, perhaps more than ever before, bracketed by deep turmoil. To the south is the rapidly imploding nation of Mali, which has the potential to severely impact Algeria's gas-and-oil-producing southern region. Across the border to the east — where significant Algerian natural gas deposits and infrastructure are located — is Libya, a country struggling to find its political footing after the successful overthrow of Muammar al-Ghaddafi.
AQIM, or a southern variant of the group, has established an effective presence in the Sahel region that includes Mali and in the extreme southern areas of Algeria. These regions are, for the most part, far removed geographically from the oil and gas installations and pipelines north of Tamanrasset and up beyond Hassi R'Mel, the largest gas reserve in the country. However, the sheer instability of Mali, and the general lawlessness of the Sahel region, presents a serious problem for Algeria, which obviously doesn't want a version of Somalia on its border. Mali's recent coup and continuing collapse bodes poorly for future efforts of the Committee of Joint Chiefs, set up in 2010 with Niger, Mauritania, and Algeria, to combat terrorism in the Sahel. And as the world has seen with the 11-year long conflict in Afghanistan — and especially NATO's inability to decisively defeat the Taliban in large part because of their sanctuary in neighboring Pakistan — Algeria faces an unenviable challenge in avoiding a similar situation with AQIM to its south in Mali.
Mali, however, is not the only external security concern for Algeria. Libya is actually in part responsible for the rapid collapse of Mali, in that heavy weapons and Tuareg fighters flowed into the region after the collapse of Ghaddafi's reign in 2011. And the problematic nexus between resources and instability that exists here is similar to that found in the Algeria-Mali border region described above There are significant natural gas deposits and installations near the Libyan/Tunisian/Algerian border area that form a substantial portion of Algeria's reserves and are estimated to be the second largest in Africa (behind Nigeria) and the tenth largest in the world. In fact, Algeria's largest proven oil reserves are located in Hassi Messaoud, near the Libyan border. Although Libya's security situation might be described as relatively more stable than Mali's, the western region of the Libya — the area that borders Algeria — is materially less stable than in the east, and there are no confident predictions as to how the post-Ghaddafi Libya will look in 2013 and beyond.
It would be difficult to overstate just how important natural gas exports are to the Algerian economy as the commodity makes up almost half of all the country's total exports from all sources. In 2010 alone, Algeria exported 6.8 trillion cubic feet — valued at roughly US $21 billion — making it the eighth largest natural gas producer in the world. While Algeria is in the process of developing its SouthWest Gas Project to compensate for expected falling production on its eastern fields, most of the natural gas exports flow out of the east and central parts of the country, including the aforementioned Massi R'Mel field, which alone holds 50% of the country's gas reserves. Instability that crosses the Libyan border thus has the inescapable potential to unleash a substantially negative impact on the Algerian economy, which would, in turn, undermine its financial ability to conduct counterterrorism (CT) and counterinsurgency (COIN) operations against AQIM and offshoot groups such as the Movement for Unity and Jihad in West Africa.
Recent press reporting also mentioned in passing that AQIM, hunkered down in the Kabylie Mountain region, relies upon kidnapping as its main source of financing (although, at the same time, it is also hesitant to offend the Berber residents of Kabylie). What is not mentioned is that oil and gas employees, both domestic and foreign, could therefore increasingly be seen as attractive targets for kidnapping. For AQIM, such operations are particularly attractive as hostages taken from this target pool would not only represent substantial financial resources (making ransom payments both more certain and more generous), but would also damage the perceived security surrounding the very industries upon which the government so heavily depends.
AQIM's ability to dramatically threaten the government in Algiers might have been significantly diminished, but its motivations have not. As such the group will persist, exploiting fissures and opportunities to stay relevant and attract adherents and supporters. Prudent planning would therefore assume a heightened threat posture as it relates to the oil and gas infrastructure in the hinterlands, and even more so given the instability on the borders.
The Interconnectivity of Economics and Counterterrorism
Another threat to Algeria's COIN and CT efforts against groups such as AQIM — as it relates to its oil and gas economy — is the worsening economic situation in the European Union. If manufacturing and industry in the EU continue to slow down or even contract, EU imports of natural gas will be correspondingly reduced. Algeria currently provides 20 percent of the EU's natural gas requirements, making it the third largest supplier of natural gas (behind Russia and Norway). As a result, any economic pain experienced by the EU will be immediately transmitted down the supply chain to Algeria. Given that 97 percent of the value of Algeria's total exports comes from natural gas and oil, any decrease in EU consumption will have a large and systemic effect on the country's economy.
With economic malaise comes higher unemployment, poverty, and other social ills that have the potential to form a fertile recruiting ground for groups such as AQIM that find a more receptive audience among poor young men with few viable prospects. Further compounding the issue, a worsening national budget would present policymakers with diminished funding for COIN and CT operations just when they will be needed most.
The situation in Algeria is not immediately dire, but does require very careful near-term planning to prevent conditions from rapidly worsening. It remains to be seen just how destabilizing Mali and Libya — and, to a lesser degree, Mauritania (which just released a senior religious advisor to the original al Qaeda, Abu Hafs al-Mauritania) — will be on Algeria; nonetheless, the compendium of factors that can impact the security situation in Algeria, both independently and collectively, merit vigilant monitoring as the vortex of problems on the border might very well cascade into an outright crisis for both the nation's economy and its overall stability.
Also available: TSG Specialized Reports: The Soufan Group's world-class network of intelligence analysts produces specialized geopolitical and risk assessment products tailored to the unique needs of our clients in the public and private sectors. We welcome the opportunity to discuss your requirements and explore how our intelligence services can assist you in achieving your strategic objectives. For more information, please contact us at: email@example.com