By Myra MacDonald
BOUMERDES, Algeria (Reuters) - With its president in a French hospital for over a month and the surrounding region in turmoil, Algeria looks from the outside to be on course for a period of unrest.
The reality on the ground is different. The state has $200 billion in reserves from oil and gas revenues to spend placating the population with jobs and subsidies and a powerful and secretive security service.
Combined with the memory of civil war, this has led to political inertia that is expected to continue with or without President Abdelaziz Bouteflika, who has not been seen since travelling to France for treatment for a stroke on April 27.
"It is not going to be a political change that triggers violence here. People are more concerned with economic justice in this society," said one western diplomat in Algiers.
The "Arab spring" revolts toppled dictators in Tunisia, Libya and Egypt in 2011.
But Algerians say they had their Arab spring in the late 1980s when the country was opened up to multi-party elections. With Islamists poised to win, Algeria's generals intervened in a 1992 coup, triggering a civil war - known as "the black years" - in which an estimated 200,000 died.
Since then the state has expanded into every area of public and economic life, ensuring stability among people who fear a return to conflict and the personal consequences of challenging the system too aggressively.
"Algeria is a bit of an enigma and also profoundly misunderstood by people that haven't been there," said Geoff Porter at North Africa Risk Consulting in New York.
"If you go down the path (of extreme dissidence) as an Algerian, you are going to find your economic opportunities limited, your interaction with the state bureaucracy very cumbersome."
Even the Salafists, whose ideology is followed by al Qaeda, have been co-opted into a system that prioritizes stability.
"We suffered in the black years," said Toufiq, a young Salafist chatting at a plastic table next to a fast-food stall selling pizzas in the coastal university town of Boumerdes.
"Muslims shouldn't fight with other Muslims," said his friend Tariq.
Near Boumerdes are the Kabylie mountains where al Qaeda in the Islamic Maghreb (AQIM) has its last bastion in northern Algeria. Nobody is sure how many fighters are left - estimates range from the low hundreds to above a thousand running frequent hit-and-run operations against security forces in the mountains.
But in Boumerdes, the Mediterranean beach was being prepared for summer visitors. Female students walked with their heads uncovered, or with a headscarf above shirts and tight jeans.
Apart from a police roadblock on the outskirts, slowing traffic to a single lane, there was no overt sign of security.
"It is quiet here," said a passer-by who gave his name as Mustafa. "Before we could not even talk like this, we were too scared. It is much better now."
Algeria's security forces have been effective in stopping militants from attacking the coastal cities where much of the population lives, relying on a large network of informers.
When violence does intrude as happened in January when militants seized the In Amenas gas plant in the far south - Algeria's decision to storm the plant quickly rather than face a hostage siege won popular support. Thirty-eight hostages, including foreigners, died at In Amenas.
PRICE OF STABILITY
The lack of real opposition has created a political vacuum and the torpor has also seeped into business. While countries from China to Europe to the United States are queuing up for a foothold, usually only big companies and multinationals are able to cut through the lethargy, red tape and corruption.
The country is also dependent on imports - each evening some 20 cargo ships could be seen waiting outside Algiers' port.
The use of subsidies and free loans to keep the peace rather than the provision of real jobs through economic reform creates vague discontent, expressed in rising crime rates and frequent but small protests by different interest groups.
"The illusion of apathy in Algeria is not something we should take for granted," said Amel Boubekeur, a research fellow at the Brookings Doha Center. "People are tired; they are repressed. People are not just afraid of the 1990s; they are afraid of losing what they have."
"But we shouldn't be looking for a change through an Arab-spring type revolution or a change in leadership, since that will not change anything and people know this."
People do try to find ways to challenge the authorities.
Newspapers turned to cartoons to lampoon Bouteflika for being treated in a Paris military hospital even though he fought in the 1954-1962 French independence war.
El Khabar newspaper said on its front page last month that "the people want the appearance of the president".
He was treated for cancer in 2005, and his disappearance from view has led to speculation that he must be seriously ill.
But after Prime Minister Abdelmalek Hellal said the president was recovering, much of the speculation about his health dissipated.
Moreover, unlike Egypt or Tunisia where dictators Hosni Mubarak or Zine El Abidine Ben Ali provided a target, authority in Algeria is dispersed through a secretive political and military elite known as "le pouvoir".
The elite avoid conspicuous consumption and have shared out the oil and gas wealth in such a way that many people have a stake in the status quo.
"They don't want to revolt against the statist economy because that is what keeps most Algerians alive," said Porter.
Algeria's military-political elite have given few clues on how they intend to manage the transition if the 76-year-old Bouteflika, president since 1999, has to step down.
The authorities might have to bring forward a presidential election due in April 2014. They are also widely expected to choose their preferred candidate to succeed Bouteflika.
Among names touted as a successor is Sellal, a 65-year-old technocrat seen as offering the possibility of economic reform, though no one is ruling out a candidate from the ranks of the ageing former independence fighters who have dominated Algeria.
The absence of information means that behind-the-scenes those in authority are trying to agree what to do.
"The refusal of ‘le pouvoir' to communicate about his health, or what happens next, is due partly to a near-Soviet cult of secrecy, but undoubtedly also indicates that the different players in authority in Algeria…have some problems reaching an agreement on the succession," said French historian and Algeria expert Benjamin Stora.
Among those expected to hammer out a consensus are General Mohamed 'Toufik' Mediene, who has run the intelligence service with an iron hand since 1990, politicians in the Bouteflika camp, and a diverse collection of men representing political, military and economic interest groups.
"We don't expect that there will be a lot of bloodshed or violence," said the western diplomat. "More of a trigger for a country like this will be long-term economic issues."
(Additional reporting by Lamine Chikhi in Algiers and Paul Taylor in Paris; editing by Anna Willard)