04-04-01 German leaders urged Algeria to push on with economic reforms, holding out the prospect of new investment and an end to what the president of the troubled North African state called an "unspoken embargo." Abdelaziz Bouteflika met with German Chancellor Gerhard Schroeder, Foreign Minister Joschka Fischer and business chiefs during the second day of a visit billed as the first to Germany by an Algerian head of state.
"We agree that reforms, which must include privatisation and give a framework for foreign investors, have to be implemented," Schroeder told. "On this basis, German investment especially should increase further." Algeria's economy expanded an estimated 5 % last year thanks to the growth of its oil and gas industries. Both the budget and trade balance are in surplus.

But to guard against a fall in oil and gas prices and cut unemployment and poverty -- seen as fuelling an ongoing Islamic revolution -- the government wants foreign investors to help modernize other moribund state-owned enterprises.
"I'm here to relaunch a relationship that has been very fruitful in the past," Bouteflika said. "I must also mention here the unspoken embargo under which my country has been suffering for 10 years." Algeria's relations with the west suffered after the North African country's military-backed government cancelled elections in 1991 that a fundamentalist Muslim party, the Islamic Salvation Front, was set to win.
An armed rebellion by Islamic radicals has left more than 100,000 civilians, soldiers and militants dead since then. New violence is reported almost daily despite fierce army crackdowns on the rebels and a peace initiative by Bouteflika after he came to power in 1999. Schroeder said he shared concern expressed by German President Johannes Rau Monday that the Algerian government restrain the use of military force and uphold human rights in its battle against Islamic insurgents.

Germany will work with Algeria to combat "terrorism" within the framework of German law and international conventions, Schroeder said. Bouteflika didn't mention the conflict in his remarks or during an earlier speech to about 100 delegates at the Association of German Industry, where he assured his audience that the performance of the Algerian economy and the government's determination to push on with reforms were a guarantee to foreign investors.
Also at that meeting, Germany's deputy economics minister said Algeria's liberalization and privatisation drive should include the most attractive industries. "Telecoms, energy and transport cannot be excluded long-term," Axel Gerlach said. German companies would also like to invest in petrochemicals, he said.
Urged by the head of a German industry group focused on North Africa and the Middle East, Werner Schoeltzke, to clarify whether foreign investors would be allowed to take majority stakes in Algerian companies, Bouteflika insisted liberalization would be "pragmatic." Outside investors were welcome to take control of struggling industries such as steelmaking, he said, but not in more promising areas such as detergents or tobacco. Bouteflika was to fly to Moscow later Tuesday for an official visit.