In Algiers, residents chafe at mammoth redevelopment plan

Sheikh Taher Belgasem, an elderly man who crunches numbers on a 20-year-old computer in a warehouse next to Ziani's shop, is grouchily pessimistic. He laughs at Dahli's troubles: "If they asked me for money I wouldn't give them a single dinar!"

But Ziani is more optimistic. He hopes the projects benefits could trickle down to him, too, but worries that wealthy people will have more of a taste for luxuries like TV dinners than the snacks he sells.

"I have to adapt to whatever happens," he says. "Maybe I will start selling frozen food."

'Capital of Modernity' struggles to attract financing

The promotional material for Algiers Medina presents an eye-catching slice of Dubai-style luxury wedged between green hills and the bay. It plans to spend 2.5 billion euro (about $3.3 billion) to build a water park and a marina with space for 600 yachts, office towers, luxury apartments, and a 24-hour shopping mall in place of the gray warehouses and abandoned lots.

Groupe Dahli's CEO, Abdelouahab Rehim, was out of the country, and the group refused numerous requests for interviews, saying he must authorize them.

He has promised that Algiers Medina will end the "gloom of Algiers" by making it "a capital of modernity," according to the Algerian French-language daily Al Watan in December 2007.

But the country's banks and investors have shown little interest in footing the bill. In February, Groupe Dahli floated the country's first public bond offer, hoping to raise 91.3 million euro ($121.3 million), but had to end the sale without meeting its sum.

Mohamed Touati, the senior business editor of L'Expression newspaper and a supporter of the project, says that a history of state socialism and high-profile business scandals have left Algerian banks cautious of private entrepreneurs, and some ordinary people downright hostile.

He points to the 2003 bankruptcy of the country's privately held Khalifa bank. Once a titan in the local business world, it collapsed in 2003 with $45 million missing from its books and CEO Abdelmoumene Rafik Khalifa living the high life in London. He was convicted in absentia and given a life sentence in March 2007, but Mr. Touati says "the Khalifa syndrome" lingers.

To conduct the country's first successful bond sale in this environment, Touati says Dahli should have worked harder to explain the project, and its financing, to the public.

"People will not invest in a project they don't understand," he says. "You need a good marketing process to understand exactly what is going on, and I think the marketing process for Algiers Medina has been very poor."

Salah Mouhoubi, professor of economics at University of Paris, says financiers need to have more vision to see the benefit of such a project.

"When the French built the Eiffel Tower, people said they were wasting money, but it in the end it gave great prestige to Paris," he says, adding that Germany, Italy, and the United States have all funded attention-grabbing projects.

"We need something that will give Algiers some prestige," he says, "and the banks should be financing it."

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