The deal struck by Italy's Leonardo group with Algeria for the in-country production of helicopters is being seen as the latest example of the North African country beefing up its defense and security capabilities while bolstering domestic industrial activity.

The Algerian defense ministry announced on Aug 11 that it had signed an MOU with Leonardo for the production of helicopters at Ain Arnat in the Setif province of the country. A joint Algerian-Italian company will produce three types of light and medium helicopters for personnel transport, cargo, medical evacuation, surveillance and 'control', the ministry said.

In a bid to further build local capabilities, Algeria will also seek to export helicopters and create and training and qualification services, while the manufacture would help the country boost its know how of composites and electronics.

The deal with Leonardo follows a number of purchases of the firm's helicopters, including the AW101, while Algeria has also taken delivery of a Landing Platform Dock vessel from Italian state yard Fincantieri.

One analyst compared the deal to set up the helicopter plant with a previous deal to buy German Fuchs armored vehicles assembled in Algeria. The agreement envisaged  the plant also turning out Mercedes trucks.

"For these dual technology deals, Algeria is looking to develop the local economy and create jobs for its young population," said Francesco Tosato, a military analyst at the Italian Centre for International Studies. "Working with Fuchs and Leonardo is a way to head off an Arab Spring type event."

Algeria experienced its own type of Arab Spring in the early 1990s, when its first free elections were held, only for a violent crack down by the army to follow after Islamists emerged victorious, leading to years of civil war. Following the eventual defeat of insurgents, the country did not then experience the Arab Spring upheavals seen elsewhere in North Africa in recent years.

"One spark could prompt serious destabilization," said Marco Di Liddo, a second analyst from the Italian Centre for International Studies.

"Algeria's oil and gas production has been hit by dropping prices and they have had to review welfare policies, leading to protests in the south of the country. A year ago, in a little noticed protest in Gherdia, the army went in after the police backed the protesters," he said.

Di Liddo said power was split between the government, the armed forces and the secret services. "Over the last few years the armed forces has put men in power and cut the influence of the secret services," he said. "However the president, who has guaranteed the power of the armed forces, is ageing, so a struggle may follow his passing."

In the meantime, the military has taken advantage of its influence to hike defense spending with some big ticket procurements. As opposed to the dual technology deals with Italy and Germany, strategic military kit comes from Russia.

Tosato said this year's defense budget stood at $10.5 billion, up from $10.3 billion last year.

The shopping list to date has included the S-300PMU2 missile, the Su-30 aircraft as part of an Air Force renewal program and the T-90 tank, following on from earlier purchases of the T-72. This year the Algerian Air Force increased its order of Mi-28NE Night Hunter attack helicopters to 42. Earlier this year, the helicopter was put into service in Syria by Russia.

Algeria is also reportedly in talks to buy 12 Sukhoi-34 Fullback striker aircraft by year end — another aircraft which has flown missions in Syria.

"Russia has used Syria as a test range and a shop window," said Tosato. "The Algerian interest in the SU-34 increased after it was used in Syria, while Russia gave the T-90 to the Syrians to show it could perform."

As opposed to the Army and Air Force, the Algerian navy has shopped around, buying vessels from China, Russia, Germany and Italy.

"The Navy is more open since the Russian naval industry is less capable, and the Navy is less of a strategic force," said Tosato.

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