The Defense Ministry has requested a $10.3 billion budget for 2013 that reflects the country's military modernization drive and the widening security challenges it faces.
These have been dramatically heightened by the wave of pro-democracy uprisings across the Arab world in which three North African dictators have been toppled since 2011.
So far, this phenomenon has passed Algeria by but the military-backed regime in Algiers remains concerned as the turmoil drags on into its third year with domestic discontent still simmering.
The political upheaval was intensified with the 2012 seizure of northern Mali by Algerian-led jihadists, raising fears they would use that remote sanctuary for transnational terrorism.
French military intervention in Mali Jan. 11, and the seizure five days later of a major natural gas complex in the southeastern desert by Islamist diehards commanded by veteran Algerian jihadist Mokhtar Belmokhtar, deepened Algerian security concerns.
Despite the increased dangers for Algeria's oil and natural gas industry, its economic backbone, "thanks to oil and gas revenues, the Algerian state has gone from an international financial basket case in the 1990s, to one of the richest in the world, with as much as $200 billion in reserves," the Financial Times observed.
Algeria has North Africa's second largest military. Jane's information group says Algeria was arguably the biggest military spender in Africa in 2009 and is the ninth largest arms importer in the world.
After its 1954-62 independence war with France, Algeria became a major buyer of Soviet arms. Since the collapse of communism, it has remained a client of Moscow.
In 2006, it signed a $7.5 billion deal with Moscow during a visit to Algiers by Vladimir Putin in March 2006 during his first term as Russia's president.
That package included MiG-29SMT and Sukhoi Su-30 attack jets, Yakovlev Yak-130 training aircraft, AT-13 Metis-M and AT-14 anti-tank missiles, T-90 main battle tanks and Mil Mi-24 attack helicopters.
Delivery of the Su-30MKA aircraft, worth $1 billion, should have been completed at the end of 2012 by Rosoboronexport, Russia's state arms exporter.
Delivery of the last of 120 T-90 tanks under a $470 million 2006 contract is still under way. Delivery of 180 T-90s under an earlier contract was completed in 2009.
Algiers is also looking for two Project 636 advanced variants of the SSK Type 877EKM Kilo class submarines. These diesel-electric boats are stealthier than the Algerian navy's four Kilos delivered in 1988 and 2010.
In 2011, Algeria signed a contract with Russia's United Shipbuilding Corp. and Rosoboronexport for two Project 20382 Tiger class corvettes, the export model of Russia's Stergushchy class ships, the latest corvette class ship in the Russian navy.
In March 2012, Algeria's Defense Ministry ordered two Meko A2000 frigates from ThyssenKrupp Marine Systems, along with six AgustaWestland Super Lynx anti-submarine helicopters, altogether worth $2.77 billion.
In 2011, the Algerian navy signed a contract with Italy's Orizzonte Sistemi Navali for a landing and logistical support vessel based on the San Giorgio class deployed by the Italian navy. Delivery is scheduled for 2015.
It will be able to accommodate three Landing Craft Mechanized, three small Landing Craft Vehicle Personnel and one large Landing Craft.
The San Giorgio class amphibious ship can carry a battalion of troops as well as up to 30 tanks or 36 armored vehicles, as well as several helicopters operating from a flight deck.
The Asian Defense website says Algiers has also signed a contract with China Shipbuilding Trading Co. for three light 2,800-ton frigates that will be built either at Guangzhou or the Shanghai Huangpu Shipyards.
Rheinmetall one of Germany's leading defense companies, plans to produce 1,200 Fuchs armored personnel carriers in Algeria over the next decade.
They will be assembled from kits as part of a move to develop Algeria's nascent domestic defense industry, which produces assault rifles and rocket-propelled grenades under license from Russia and China.
In 2011, Berlin authorized the delivery of 54 Fuchs APCs worth $254 million to Algeria as well as other military vehicles worth $372.8 million.
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