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Maghreb Makes the Switch From Socialism to Capitalism

FACED with spiraling unemployment and economic stagnation, North Africa's 30-year love affair with socialism is cooling. ``We are cured of socialism,'' says a senior Tunisian official. ``Capitalism is the only way. We tried the other way and it didn't work.''

As in many third-world states, socialism was embraced in the Maghreb following independence as the most efficient way of mobilizing for the essential tasks of statebuilding. Ideologically, socialism offered a radical alternative to the capitalist systems associated with decades of European colonialism.

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But, disillusioned with poor economic performance, these governments are now busily dismantling the economic structures erected over nearly 30 years.

In Algeria, where 25 years of centralized bureaucracy and one-party rule were challenged by riots last October, agricultural collectives have been broken up and restrictions on the private sector have been lifted. In Morocco, bloated state monopolies are being dismantled.

In Tunisia, where the process has advanced furthest, the government has dismantled trade barriers, erected incentives to foreign investment, allowed the market to set domestic prices, and begun privatizing 300 state-run companies - all with the backing of President Zine al-Abidine Ben Ali, a former ambassador to socialist Poland.

``I don't know if he was a socialist when he went to Poland,'' notes a European diplomat in Tunis. ``He definitely wasn't when he returned.''

Even Libya has discovered the virtues of free enterprise. Faced with plummeting popularity at home based on economic hardship, Libyan leader Col. Muammar Qaddafi has relaxed controls on businesses, allowing small family firms to operate and permitting private companies to purchase and resell imports at a profit.

Economists say the reforms have often been halting because streamlining state-run firms could dump thousands on workers on already glutted job markets, aggravating social tensions.

``People are talking about the need to build the private sector but nobody's talking about the need to sell the public sector,'' observes one diplomatic source of Algeria's reluctance to make a clean break with the past.

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The disillusionment with socialism, once integral to the raison d'etre of many third world states, has also left an ideological void which, among other things, has heightened the appeal of Muslim fundamentalists.

``Ideology has broken down,'' notes one political analyst in Algiers of the absence in Algeria's new constitution of any reference to socialism as the country's ``irreversable choice.'' ``Now we're in a pragmatic period which always implies a lot of disillusion.''

Still, economists say the gradual shift toward a freer market is one factor that has helped reduce deficits in Morocco, put consumer goods on shelves in Libya, and given Tunisia one of North Africa's highest growth rates.

``Socialism achieved great things but all in all it has been disappointing,'' says Lakhdar Brahimi, undersecretary general of the Arab League, based in Tunis. ``All the more so when you compare it with capitalism.''

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