Algeria's Electoral Turnaround Leaves US Weighing Its Policy

State Department says it will not take sides in constitutional dispute

JUST days before Muslim fundamentalists were poised to sweep parliamentary elections and transform Algeria into an Islamic state, Bush administration officials were sticking with a familiar line:

"If what results in Algeria emerges from a democratic process we will work with it," one administration official predicted. "We want to engage with whatever regime holds power."

A week later, with Algeria's fragile democratic experiment lying in ruins, the United States ardor for democracy in the Arab world seems to have cooled.

Queried this week by reporters, a US Department of State spokesman voiced "concern" that a military-controlled government had canceled parliamentary elections that would have been held today.

Though civil strife appears imminent, the US has issued no public demand that the elections be reinstated. The ambivalent State Department response reflects the difficult choice it faces in Algeria between the principle of democracy, which it has long championed, and a regime that democracy could produce which could prove inimical to Western interests.

The response to the Algerian crisis also suggests that when principles and interests collide - now as during the cold war - it is interests that prevail. As one observer notes, the policy is not without risks.

"If the fundamentalists eventually win, we will be identified with a regime hostile to our interests, like we were in Iran," says Henry Schuler of the Center for Strategic and International Studies in Washington.

"You don't always get what you want when you have a democracy. We'll have to learn to live with what we get or back away from our ideals."

Responding to criticism that the US was taking sides, State Department spokes-woman Margaret Tutwiler Tuesday revised the department's initial position that the takeover was legal under Algeria's Constitution.

Adopting a more neutral position, Ms. Tutwiler said: "We are not going to take sides on whether [Algeria's High Security Council] are indeed operating within their Constitution or, as the opposition claims, they are not."

In the first round of parliamentary elections last month, the Islamic Salvation Front (FIS) shattered the power of Algeria's once- dominant National Liberation Front. Most observers predicted that balloting scheduled for today would have given the fundamentalists a simple or possibly two-thirds majority of parliament, enough to rewrite the constitution to conform to Islamic law. Benjedid resigns

Apparently under military pressure, Algerian President Chadli Benjedid resigned on Saturday, leaving power in the hands of the security council controlled by the Algerian military. The council has postponed elections to replace Mr. Benjedid and has announced a new five-man Council of State to carry out the functions of the president. (New Algerian executive, Page 3.) It has also threatened to ban the FIS.

One Bush administration source notes that the US may have less to fear from religious fundamentalism, per se, than from the fact that Islamic governments may prove even less capable than secular regimes of coping with the region's over- whelming economic problems.

Like Algeria, many Arab countries are on the brink of economic chaos caused by huge debts, high unemployment, and economic systems caught in the early, disorganized stages of a transition away from strict government control. If the promise that "Islam is the way" fails to bear fruit, US officials worry, the result could be disillusionment and civil unrest.

But more than economics lies behind the concern now evident in the Bush administration over developments in Algeria.

With or without parliamentary elections, the success of the Muslim parties has been deeply divisive in Algeria and now threatens wide-scale disorder. New social disruptions could prompt more Algerians to emigrate to Western Europe, where the presence of more than 4 million North African workers has already led to the rise of racist, right-wing political movements.

US officials are also worried that the ascendancy of Muslim fundamentalism could poison the environment for US-brokered Middle East peace talks.

Diplomatic analysts also warn of a possible spillover effect that could strengthen Islamic parties and weaken governments friendly to the US in countries such as Tunisia and Morocco. "It's discomforting to the US because some of the targets of the fundamentalists are among our most comfortable partners in the region," notes Mr. Schuler. An Algeria in the hands of Muslim fundamentalists would, unlike Iran, probably not be militantly anti-American. Support for Iraq

But Muslim groups in Algeria did demonstrate in support of Iraq during the Gulf crisis and would be more sympathetic to Libya.

About a dozen US firms purchase Algerian gas and oil, the country's leading export. As Iran's quest for foreign investment, technology, and know-how suggests, a Muslim ascendancy would not necessarily mean the end of commercial relationships.

But FIS leaders have criticized a recent law that would permit foreign firms to acquire equity in Algerian gas and oil reserves in partnership with the country's national oil company.