The risk of a destablizing succession battle has been present ever since President Abdelaziz Bouteflika won a fourth term in April 2014, less than one year after suffering a serious stroke. Recent events have lent credence to widespread suspicions that Bouteflika is incapable of fulfilling the duties of his office and also suggest that competing factions are maneuvering for position not very far behind the scenes.

At this point, just about any succession scenario is pure speculation, as the evidence suggests that even Bouteflika’s inner circle is unsure about how it wants to proceed. That there is still such a high level of indecision on a matter of such importance is especially troubling at a time when the weakness of the economy has highlighted the urgent need for aggressive moves to diversify the oil-dependent economy, and a recent attack by an affiliate of Al Qaeda and the expansion of ISIL into North Africa underscore the potential for government instability to lead to a security crisis.

The IMF and independent analysts have concluded that long-term economic health cannot be assured, even if oil prices recover, without fundamental fiscal reforms, an opening of the economy to more foreign investment and trade, the development of capital markets, and the strengthening of governance and transparency. There have been some positive signs of late. The 2016 budget includes provisions designed to spur private-sector investment, including the creation of new industrial zones and the easing of restrictions on sales of shares in state-owned enterprises. In March, the state oil company, Sonatrach, announced plans to open direct negotiations with potential buyers for stakes in 20 oil and gas fields.
However, an attack by Al Qaeda on the Krechba gas plant on March 18 delivered an unwelcome reminder of the risks for foreign firms operating in the oil and gas sector, a consideration that will no doubt reduce the attractiveness of any assets made available by Sonatrach, especially if oil and gas prices remain low. Moreover, the budget provision authorizing the sale of stakes in public companies to private investors is almost identical to one that was included in a supplementary budget in 2009, but never implemented.

And oil investors have not forgotten the government’s unceremonious repeal of legislation intended to ease restrictions on foreign participation in upstream oil and gas ventures back in 2005. Given that track record, many potential investors will no doubt take any invitations made by the government with a large grain of salt.