In Algiers, residents chafe at mammoth redevelopment plan

Many say a post-civil war makeover of the city's waterfront ignores the needs of a struggling population.

Ringed by low hills and rocky beaches that sweep far into the distance, people here say Algiers Bay is among the world's most beautiful coasts.

But a closer look is less picture-perfect. The waterfront is littered and largely abandoned to young couples looking for privacy and troubled young men looking for a fix. It is the kind of place you don't bring your family or your wallet, and it is not in any way evocative of this city's French and Arabic nicknames: "Algiers the white" and "Algiers the joyful."

Since the end of its civil war in 2002, Algeria has strived to pull itself out of the physical disrepair and international isolation brought on by a decade of vicious fighting that killed as many as 200,000 people. Now, as a possible balm for the city's malaise, real estate developers and government officials are planning an $8 billion makeover of the waterfront – a glittering office park that would sit next to the third-largest mosque in the world.

But residents are decidedly cool to a project that would overhaul the physical look of the city without addressing the practical needs of its depressed population, which faces an official unemployment rate of 12 percent – though independent sources say it's roughly double that.

"We are Muslims and we love our religion, but how can the government agree to build a mosque like that when at the same time we need houses, universities, hospitals, and new roads?" says Hussein, a snack-shop owner in the hardscrabble working-class neighborhood of El Harrach who refused to give his last name. "They should be creating jobs, not spending all that money on one mosque."

Worries the project ignores the poor

In February, developer Groupe Dahli unveiled an ambitious plan to transform the waterfront with a megaproject dubbed "Algiers Medina."

Supporters of the project, which is separate from government plans for a $4.5 billion mosque, say it will bring the country into the modern world and give the Algerian people a capital they can be proud of after years of war.

"We want a capital that corresponds to our ambitions and is part of the modern world and an interconnected Mediterranean world," says Said Bouhadja, a member of Parliament who sits on the National Commission for Development. "We need to renovate the capital and give it and the country a new image," he says. "The Algerian people need a capital they can be proud of."

But the project has struggled to raise capital, and many ordinary people worry that the government is more excited about a modern skyline than thinking about the best interests of the poor.

For 40 years, Abdelnour Ziani has lived and worked on the same street in Hussein's El Harrach neighborhood, which is now abuzz with gossip about Algiers Medina.

The proposed project would take up a broad swath of neighboring Mohamadeyya.

"This area has not been renovated or changed since the French left," Mr. Ziani says. "The government never even builds a new road. All they do is put new asphalt on top of the old.

"Algiers Medina will be the biggest change any of us have ever seen," he says.

But the plan calls for no renovations to El Harrach, and residents say they doubt it will add anything to their lives, other than more traffic.

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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