Saturday, June 05, 2010

Algeria - Minister argues for state-ownership and against foreign direct investment

[business week] Algeria's telecommunications minister says the country has the right to be protectionist and reinstate state monopolies to defend its interests -- regardless of whether that scares off foreign investors.

Moussa Benhamadi told Alger Chaine III radio that it's the Algerian government's "sovereign right" to make these decisions, and that it can decide on "protectionist measures when circumstances require them."

The minister's comments, reported Friday, referred to a plan announced by the government to pre-empt the sale of the country's main cell phone operator, Djezzy, owned by the Egyptian firm Orascom Telecom.

The buy-out would recreate a state telecommunications monopoly in Algeria after a decade of painstaking efforts to liberalize the largely government-run economy.

The row between Algeria's government and Orascom Telecom became public this spring after the Algerian football team was harassed by Egyptian supporters in Cairo.

Orascom's owner, Naguib Sawiris, said earlier this week he hadn't heard from Algerian authorities since they blocked negotiations for Orascom to sell Djezzy to the South African firm MTN. Sawiris values Orascom telecom's Algerian subsidiary at US$5 billion to US$7 billion.

Benhamadi said Algerian government experts will take their time to study the issue and won't be pressed into a fixed deadline to respond. The Djezzy sale issue is too sensitive to be handled by his ministry alone and is being overseen directly by the prime minister's office, he said.

Benhamadi became telecommunications minister last week after his predecessor was fired, largely because of his handling of the Djezzy issue.

The possible buy-out has several independent media outlets wondering whether Algeria is reverting to its long history of state-controlled economy.

The Algerian state derives large revenues from oil and gas, but has been struggling to attract foreign investors or tourists. It enforced a new law, retroactive to the 2009 fiscal year, that largely bans foreign firms from repatriating benefits earned by their subsidiaries in Algeria.

Algerian minister defends protectionism

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