Algeria’s week: defense spend, Hirak echoes, and energy pivots

Defense and oil dominate—while Algeria’s political and social tensions simmer

Algeria’s budget priorities remain crystal clear: defense spending leads, followed by infrastructure. The country allocated the second-highest share of public funds to arms purchases in 2025, trailing only Ukraine. This reflects a long-standing strategy of military self-reliance, reinforced by regional rivalries and internal security concerns. The defense sector absorbs resources that could otherwise fuel economic diversification or social programs.

Oil revenues still underpin much of this spending. Despite fluctuations in global prices, Algeria’s hydrocarbon sector remains the backbone of state finances. The government approved a $200 million Afreximbank-backed investment in the Hassi Bir Rekaiz oil project, signaling continued reliance on petroleum. Yet this dependence creates vulnerabilities. Oil price volatility, coupled with stagnant diversification efforts, leaves Algeria exposed to economic shocks.

Meanwhile, infrastructure projects—particularly housing—are gaining traction. The National Housing Company (CNL) aims to deliver 200,000 units by 2025, a target that, if met, would address a critical shortage. But progress remains uneven. Subsidies for fuel and basic goods persist, absorbing funds that could accelerate development in other sectors. The tension between short-term relief and long-term structural reforms remains unresolved.

Hirak’s shadow lingers—political reforms fall short of expectations

Six years after the Hirak protests erupted, their legacy persists in Algeria’s political landscape. The movement forced concessions, including the release of some political prisoners and minor constitutional adjustments. Yet deeper reforms have stalled. The latest “technical” constitutional amendments focused on procedural fixes rather than substantive changes, leaving power structures largely intact.

Turnout in recent elections has been low, reflecting public disillusionment. The government’s handling of protests—including crackdowns on dissent—has reinforced skepticism. While some activists were freed, others remain behind bars, and the state’s approach to political opposition remains restrictive. The Hirak’s demand for systemic change has been met with incrementalism, not transformation.

This political stagnation contrasts with Algeria’s regional diplomacy. After years of strained relations, Algeria has renewed ties with France, signaling a pragmatic shift. Foreign Minister Ahmed Attaf met with his French counterpart to discuss bilateral cooperation, marking a thaw in a historically fraught relationship. Yet domestic pressures—particularly from nationalist factions—could complicate further engagement.

Energy pivots and regional tensions—Algeria’s balancing act

Algeria is exploring new energy avenues, but old rivalries persist. The country is positioning itself as a green hydrogen player, with discussions underway between Algerian officials and Siemens Energy. If successful, this could diversify exports beyond traditional hydrocarbons. However, the transition faces hurdles: high costs, infrastructure gaps, and competition from established energy producers.

Meanwhile, Algeria’s relationship with Morocco remains tense. The two nations’ rivalry extends beyond politics into cultural and historical disputes. While Morocco restores Jewish heritage sites, Algeria has demolished a synagogue in Algiers, highlighting divergent approaches to memory and identity. These tensions undermine regional cooperation, particularly the long-collapsed Arab Maghreb Union (AMU).

Algeria’s outreach to Africa, however, shows promise. The $200 million Hassi Bir Rekaiz investment, backed by Afreximbank, reflects a push for intra-African energy integration. Yet broader Maghreb unity remains elusive. The AMU’s collapse—described as a failure, not just a stall—has left Algeria isolated in North Africa. Without progress on regional integration, economic and diplomatic opportunities will remain limited.

Social gaps and legal failures—gender, heritage, and unmet promises

Algeria’s legal framework on gender-based violence remains unfulfilled. Despite a 2004 pledge to establish national shelters, authorities have yet to deliver. Amnesty International has documented persistent failures to protect survivors, with awareness campaigns outpacing enforcement. The gap between legal protections and real-world implementation underscores deeper systemic issues.

Heritage preservation tells a similar story. While Morocco invests in restoring Jewish sites, Algeria’s approach has been contradictory. The demolition of a synagogue in Algiers contrasts with Morocco’s efforts, raising questions about state priorities. These disparities reflect broader tensions over historical narratives and national identity.

Economic diversification efforts, though promising, face obstacles. The push for green hydrogen and renewables is still in early stages. Without stronger institutional support, these initiatives risk remaining piecemeal. Entrepreneurs in energy and infrastructure must navigate a landscape where state priorities often clash with private-sector needs.

Key takeaway for entrepreneurs

Sources

• ConstitutionNet
• The Arab Weekly
• African Arguments
• Stimson Center
• The Libya Observer
• Ynetnews