In his first speech after taking office in 1999, Bouteflika acknowledged that the state's institutions were ailing from abuses of authority, inefficiency, waste, and corruption. He indicated that social cohesion and peace depended on a regeneration of the state, which must be based on the rule of the law and on the promotion of the interests of the entire nation. Among the tasks at hand were a much-needed reform of the educational system, a better-orchestrated economic reform, a firm and tangible encouragement of private investment, the modernization of agriculture, and special attention to the country's youth. He reaffirmed Algeria's Islamic and Arab-Berber identity and called for the renewal of regional integration efforts. When he hosted the July 1999 Organization of African Unity (OAU) summit meeting in Algiers, 44 heads of African states were present, an indication that others in the region were open to working with the Bouteflika-led government.
Like his predecessors, Bouteflika is committed to reviving the economy and to addressing the most urgent social grievances while maintaining law and order. His task is huge, complex, and not without risks. In May 2000, as his first year in office was coming to an end, 30 members of the national assembly presented Bouteflika with a signed petition expressing dissatisfaction over the limited amount of legislative work completed during the previous 12 months. By 2001, Bouteflika still had not achieved an end to political violence and continued to struggle to unite the country's many factions. He reshuffled his government in May 2001, hoping to eliminate internal opposition to his programs.
In April 2001, Bouteflika was forced to face the deep resentment of citizens in the Kabylie region (between Algiers and Constantine). The Berbers who live in the region adamantly adhere to Tamazight, their ethnic language, refusing to adopt the official government language of Arabic. The death of a Kabylie teenager while in police custody sparked violent protests, but Bouteflika initially took ten days to issue a response, adding to the resentment. Bouteflika, in an attempt to address Berber sentiments, took several actions aimed at winning their support (or at least calming their violence). In March 2002, Bouteflika announced that the Berber language would be added to the Constitution as an official language of the country (along with Arabic).
While concentrated in Kabylie, the violence was seen by many observers as a reflection of the frustration felt by all Algerian youth, who face widespread unemployment and repression at the hands of the Algerian military. As of 2002, about half of the population was under the age of 20. The economy must come out of its slump to offer significant job prospects.
Bouteflika expressed commitment to speeding up privatization to stimulate economic development, but after two years in office his efforts had not made much headway. He seemed more interested in mediating international crises in the region than attending to the country's domestic problems. Frustrated by his inability to make legislative progress, following the October 2002 legislative elections Bouteflika proposed a law that would exclude any political party that did not garner at least 5% of the total votes cast from participating in future political contests, a move designed to cut down on political conflict.
In December 2002, in a conciliatory gesture, Bouteflika marked Id al-Fitr, the end of the Muslim holy period of Ramadan, by pardoning or reducing the jail terms of 5,000 prisoners.