The Rising Power of North Africa's Jihadists Rattles Algeria One wet, chilly February morning, Ali Zaoui climbed into his car in Algeria's capital, drove 300 miles south into the desert, and knocked on the door of a three-bedroom house in the oasis city of Ghardaïa. Zaoui was well known to the occupants. They were the parents of the then most wanted man in North Africa, Mokhtar Belmokhtar, the one-eyed Islamist commander who had masterminded the hostage siege in January at a natural-gas plant in his native Algeria. The attack resulted in the deaths of 38 foreigners, including managers and specialists of Western oil companies. It was Algeria's worst terrorist attack in years, and the worst ever for the global oil industry, anywhere. Zaoui, a veteran anti-terror fighter for Algeria's security services, had spent years coaxing armed militants to surrender under an amnesty program and had come to know Belmokhtar's parents well over five years of trying to persuade one of Algeria's most fearsome jihadists to surrender. He never had won over Belmokhtar. But Zaoui thought they had an understanding: Don't target Algeria. MORE: 50 Years of Algerian Independence: Scenes from a 20th Century War That deal was now dead. Zaoui was fuming. "I told his mother, "Tell him to give up, or he will die, and we will send you his body,"" he says, sitting in a café in Algiers on his return, slumped by fatigue after his long journey. He did not respect our truce. Days later, on March 2, Zaoui woke to stunning news: Chad's military leaders were claiming that they had killed Belmokhtar in battle, in the remote Agrar des Ifoghas mountains along Algeria's borderlands with Mali. His warning to Belmokhtar's frantic mother had been correct: Her son would not survive the biggest terror attack of his career. "There is no need for me to visit them again," he told me by phone from Algiers, after Belmokhtar's death. It is over. And yet, the country's terror threat remains. In spite of the apparent killing of Belmokhtar (his body has still not been found) the rising power of North Africa's jihadists is having a continued and profound impact on the terror mastermind's homeland. Algeria is the region's economic powerhouse, and the biggest country in Africa. And until now, the oil-rich country thought it had dodged an Arab Spring-style upheaval by imposing tight order through its quasi-military regime and spending millions appeasing disgruntled citizens. Algeria has been so calm, in fact, that Western officials had almost forgotten its proven potential for violence. But the calm was an illusion, as was clear from the hostage siege in January. Trouble has come not from inside, however - there has been no major pro-democracy uprising among Algeria's 37.4 million people - but from the outside in the form of the region's tumult, which is closing in on Algeria and rocking the political system that has held sway for 50 years. The primary threat to Algeria's stability comes from the region's resurgent Islamists. Leaders of the region's al-Qaeda affiliate, al-Qaeda in the Islamic Maghreb (AQIM) - Belmokhtar was allied with AQIM - have become rich over the past several years from drug trafficking and ransom payments, and with that money they have bought military-grade weapon stocks acquired when the former Libyan dictator, Muammar Gaddafi, was toppled from power and his weapons looted and sold on the black market. To Algeria's south, Islamists took over the northern part of Mali, which in January prompted France to enter the war there, driving back the Islamists. The war in Mali forced Algeria into an alliance with its old nemesis France, with which it has had decades of tensions. French jets used Algerian air space as they made their way towards targets in Mali. Algeria after decades of sticking to a policy of not getting embroiled in its neighbors" conflicts, gave tacit permission to American drones to operate on its borders with Mali, and at In Amenas during the siege, further highlighting Algeria's ties to the West. Now comes the question: Can Algeria's regime ride out the instability, or will it crack under the pressure, adding yet more upheaval to the region, in a country with billions in Western investments and from which U.S. imports last year were worth nearly $1 billion? And will these outside pressures prompt internal unrest? Already, Algeria's youth - 70% of the country is under 30 - are clamoring for jobs, houses, and better lives and griping about the aging men in power. Says Fayçal Métaoui, political columnist for al-Watan newspaper in Algiers, "People are patient. But they have their limits. MORE: With Limited Freedoms, Many Algerians Vote with Their Feet For years, Algerians have largely accepted the ruling system, in which the military holds huge sway, guiding key decisions behind the scenes through the President, and leaving the elected parliament a "facade," as opposition Member of Parliament Mostefa Bouchachi puts it. One can hardly blame Algerians for accepting this deal for so long. Many spent their youth witnessing the horrific conflict of the 1990s, which erupted after the military scrapped the results of Algeria's 1991 elections, which was won by Islamist political parties, some of whom favored imposing strict Shari'a law on the country.Since then, Algeria's government has pumped the message that it rescued the country from Islamic terrorism, an argument that has some basis in truth. But after Mali's conflict and the hostage crisis, the government's claim - that terrorism would ensue if there were a change in Algeria's political structure - seems painfully flawed. With the government seeming off balance, it is possible that the spark for revolt could yet emerge. Algeria is not inoculated against mass protest. In January 2011, inspired by young Tunisians, Algerians poured into the streets to demand political change but they were heavily outnumbered by security forces. President Abdelaziz Bouteflika raced to defuse the crisis, announcing more direct elections, ending the 20-year state of emergency, and committing millions of dollars to addressing the grievances of young Algerians. He offered long-term loans at 1% interest, up to tens of thousands of dollars, effectively giving money away in a program that remains in effect. He promised to build 2.4 million new houses, addressing one of the loudest complaints among young Algerians, who say they are forced to delay marriage, since they cannot move out of their parents" overcrowded apartments. Two years on, those houses have been slow in coming. State-run television stations trumpet blueprints of new projects, but delivery dates remain vague. When the government recently announced that unemployment rates had plummeted from 20% in 2000 to 11% in 2010, Algerians dismissed the news as not credible. And a steady brain drain among bright, ambitious young Algerians suggests that Algeria's calm isn't necessarily because people are satisfied. For the West, an upheaval in Algeria - whether driven by terrorism, popular discontent or a combination of the two - could be disastrous. Algeria is many times bigger than tiny Tunisia, or even than Libya or Egypt. With 12.2 billion barrels in oil reserves and 159 trillion cubic feet of natural gas, it is a key OPEC member. Its biggest trading partner is the U.S., with more than $15.25 billion in trade last year, followed by Italy and Spain, which lie a spitting distance from Algeria's Mediterranean shore. And unlike Mali, Algeria has long-term, multi-billion-dollar partnerships with Western enterprises, including the U.S. oil company Anadarko, Italy's ENI, France's Total, and many others. For the U.S. and Europe - which have pushed for civil rights and democracy in this corner of the world, Algeria is a case apart. Its autocratic regime looks better placed to protect Western business interests, whose overthrow could unleash perilous chaos - including perhaps powerful jihadist groups. That is why so little is said about the lack of freedoms in the country. "The alternative could be a lot worse," says Vicki Huddleston, former U.S. ambassador to Mali and until 2011, the Deputy Assistant Secretary of Defense for African Affairs. If Algeria destabilizes, then AQIM will be up there very fast. Partly because Algeria forbids foreign militaries from operating on its soil, the Pentagon has acknowledged that it is operating Predator drones from a base in next-door Niger, allowing it to keep an eye on Algeria's 4,500 miles of borders with its mostly volatile neighbors. Those drones will need to keep watch in all directions. On Feb. 2, two weeks after the In Amenas siege ended, tribesmen in southern Algeria arrested armed militants trying to sneak across the Mali border. Two days later, deep inside Algeria near the northeast border with Tunisia, about 50 attackers disguised as soldiers laid siege to a military barracks, in an operation that reportedly involved militants from both sides of the border. The fate of Belmokhtar remains unresolved. Since his body has never been handed to Algerian officials, some fear a ruse concocted by terror groups to conceal his escape. Ali Zaoui, the counter-terrorism operative in Algiers, thinks that is unlikely. He says tribal leaders in the borderlands of Algeria and Mali have confirmed Belmokhtar's death. If true, Algeria's terror threat did not die with him. VIDEO: Desert Refugees in Algeria Await Recognition