The first year of Bouteflika's second term also featured a new five year plan, much larger this time drafted. The Complementary Plan for Economic Growth Support (PCSC: Plan Complementaire de la Croissance Economique) aims for the construction of 1 million housing units, the creation of 2 million jobs, the completion of the East-West highway, the completion of the Algiers subway project, the delivery of the new Algiers airport, and other similar large scale infrastructure projects. The PCSC totals $60 billion of spending over the five year period. Bouteflika also aims to bring down the external debt from $21 billion to $12 billion in the same time. He has also obtained from Parliament the reform of the law governing the oil and gas industries, despite initial opposition from the workers unions. However, Bouteflika has since stepped back from this position, supporting amendments to the hydrocarbon law in 2006, which propose watering down some of the clauses of the 2005 legislation relating to the role of Sonatrach, the state owned oil & gas company, in new developments. It also proposes new provisions enabling the country to benefit from windfall taxes on foreign investors in times of high prices. Bouteflika has also put up for sale 1300 public sector companies, and has already achieved privatization of about 150 of them, mainly in the tourism, food processing, cement, construction material and chemical industries.
On the international scene, Bouteflika's second term has seen diplomatic tensions rise with France due to the controversial voting by theFrench Parliament of a law ordering French history school books to teach that French colonisation had positive effects abroad, especially in North Africa. The diplomatic crisis which ensued has put on hold the signing of a friendship treaty with France (23 February 2004, re-endorsed in December 2005). Ties to Russia have been strengthened by large imports of Russian military hardware – about 7 billion USD were spent in one single purchase – although relations entered a rocky phase, at least temporarily, when Algeria refused to accept some MiG fighter jets due to their allegedly poor quality. Rumors of the two countries negotiating a form of cartel for natural gas, similar to OPEC's role in oil affairs, with Iran and Qatar also involved, have appeared repeatedly, and Bouteflika has confirmed an interest in the idea. (Russia is the no. 1 gas supplier to the EU, and Algeria the no. 2 supplier.) Bouteflika has also carefully cultivated a relationship with China, with exchanges of state visits between the two countries.
Algeria has remained involved in Arab affairs, and seen a somewhat growing role there. In 2004 Bouteflika also organised the Arab LeagueSummit and became President of the Arab League for one year. His calls for reform of the League did not gain sufficient support to pass in during the Algiers summit however. Like in previous years since the late 1980s, Algeria has kept a relatively low profile in the Palestine and Iraq issues. Algeria has remained preoccupied with the Western Sahara issue, counter-lobbying Moroccan attempts to gain international acceptance for Moroccan-ruled autonomy in the disputed territory, at the expense of Polisario's (and Algeria's) calls for the long-since decided self-determination referendum to finally be held. Relations with Morocco therefore remain poor, and Algeria in 2008 repeatedly refused to answer Moroccan demands to open the common land border, which has been closed since 1994. Both Morocco and Algeria have since approximately 2005 spent several billion dollars in what could be described as an arms race between them, mainly on modernizing and expanding their air forces.
In sub-Saharan Africa, a major concern of Bouteflika's Algeria has been on-and-off Tuareg rebellions in northern Mali. Algeria has asserted itself forcefully as mediator in the conflict, perhaps underlining its growing regional influence. Algerian interest is driven by its extensive interests in the region: smuggling routes as well as legal economic activity crosses these virtually unguarded borderlands, and refugees from the conflict have entered southern Algeria to mix with the Tuareg populations there. Also, the area is known as a hideout of a southern branch of AQIM, further heightening Algeria's interest in the area. Compromise peace agreements were reached in 2007 and 2008, both mediated by Algiers. The related Touareg revolt in neighbouring Niger has not seen the same Algerian involvement, even if the anti-government MNJ movement has on at least one occasion called for Algerian mediation similar to in Mali. Algeria's involvement in Africa has otherwise been concerned with supporting the African Union, and been marked by a rapidly strengthening coordination with South Africa, which, among other things, has emerged as Algeria's main ally on the Western Sahara issue.
All in all, Algeria's foreign policy under Bouteflika remains hinged on same axis as under earlier governments, emphasizing South–South ties, especially with growing Third World powers (China, South Africa, Brazil, etc.) and guarding the country's independence in decision-making visavis the West, although simultaneously striving for good trade relations and non-confrontational political relations with the EU and USA.
President of Vietnam Nguyen Minh Triet on 16 July 2009 met with Bouteflika on the sidelines of the 15th Non-Aligned Movement (NAM) summit in Egypt. President Triet and Bouteflika agreed that the two countries still have great potential for development of political and trade relations. Triet thanked the Algerian government for creating favourable conditions for the Vietnam Oil and Gas Group to invest in oil and gas exploration and exploitation in Algeria.
Hospitalization in 2005
Bouteflika was admitted to a hospital in France on 26 November 2005, reportedly suffering from a gastric ulcer hemorrhage, and discharged three weeks later. However, the length of time for which Bouteflika remained virtually incommunicado led to rumours that he was critically ill with stomach cancer. He checked into the hospital again in April 2006.
A leaked diplomatic cable reveals that by the end of 2008, Bouteflika had developed stomach cancer.
Constitutional amendment for a third term
Bouteflika appointed a new Prime Minister, Abdelaziz Belkhadem, in 2006. Belkhadem then announced plans to amend the Algerian Constitution to allow the President to run for office indefinitely and increase his powers. This was widely regarded as aimed to let Bouteflika run for president a third term, and he has not denied that he plans to do so. A referendum was originally scheduled for 2007, but cancelled for reasons never explained. In 2008, Belkhadem was again shifted out of the premiership and his predecessor Ahmed Ouyahia brought in, having also come out in favor of the constitutional amendment. A constitutional amendment is believed to be planned for 2008 – before the term expires – in the form of a referendum or a parliamentary vote. Observers predict an easy win for Bouteflika in both cases, if he manages to retain the loyalty of major powerbrokers: forces loyal to him dominate the parliament, and he had no trouble winning the presidential election in 2004 by a wide margin. Even so, the proposed amendment remains hotly debated and controversial in Algerian political circles, with many in opposition groups describing it as an undemocratic attempt to further strengthen Bouteflika's personal rule.
The Council of Ministers announced on 3 November 2008 that the planned constitutional revision proposal would remove the presidential term limit previously included in Article 74. The People's National Assembly endorsed the removal of the term limit on 12 November 2008; only the Rally for Culture and Democracy (RCD) voted against its removal.
Third term as President, 2009–present
Following the constitutional amendment allowing him to run for a third term, on 12 February 2009, Bouteflika announced his independent candidacy in the 2009 presidential election. On 10 April 2009, it was announced that Bouteflika had won the election with 90.24% of the vote, on a turnout of 74%, thereby obtaining a new five-year term. Several opposition parties had boycotted the election, with the opposition Socialist Forces Front citing a "tsunami of massive fraud."