By Lamine Chikhi
ALGIERS (Reuters) - The long-standing chief of Algeria's ruling FLN party Amar Saadani has resigned just weeks after making accusations that a retired spy chief and a former prime minister had been French agents.
Saadani, a close ally of President Abdelaziz Bouteflika, has often been critical of opponents, but analysts said he crossed a line when he openly criticized veterans of the independence war against France.
Algeria is mostly still run by a generation of older politicians involved in the war of independence against France, including Bouteflika. And the FLN or Front de Liberation Nationale has dominated Algeria's politics since independence in 1962.
"I am resigning because of health problems," Saadani told FLN members during a meeting on Saturday, which was broadcast on local television.
Djamel Ould Abes, 82, a doctor and close Bouteflika associate, has been appointed new FLN chief.
In remarks earlier this month during an FLN meeting, Saadani had accused Mohamed Mediene, former chief of the military spy directorate known as the DRS, and former premier Abdelaziz Belkhadem, a personal advisor to the president, of working as French agents in the past.
Mediene, who was rarely seen in public during his time as DRS chief, has made no statement in response. But Belkhadem dismissed the allegations in comments to local media.
"He can ask people in my village what I did during the war of independence," he said. "Everyone can ask what my family did during the war."
Mediene was forced into retirement earlier this year as part of Bouteflika's campaign to curb DRS political influence.
Bouteflika has governed the North African OPEC member for nearly two decades, but he has rarely been seen in public since suffering a stroke in 2013 even after winning a fourth term a year later.
For many Algerians, Bouteflika still represents a symbol of stability and consensus, a independence war veteran who saw them through a 1990s conflict against armed Islamists that killed 200,000 people and into a period of peace and high oil prices.
Before his re-election in 2014, Bouteflika had began to take steps to rein in the DRS.
"Bouteflika used to unify people not divide them, and Saadani's remarks have put the president in an embarrassing position," political analyst Anis Rahmani told Reuters.
Saadani's departure comes as the FLN prepares for legislative elections in 2017.
"The FLN, whose real boss is Bouteflika, wanted to make sure militants follow his instructions in the upcoming local elections," one senior FLN member told Reuters. "It sounds that Saadani had started to become autonomous."
Bouteflika, in a wheelchair after his stroke, has recently been seen more at public events to open a conference hall before an OPEC meeting and an inauguration of a theater.
Algeria rode out the 2011 Arab Spring uprisings and turmoil in the region partly due to fears of a return to the chaos of its devastating 1990s war.
The collapse in oil prices since 2014 are testing Algeria's mostly centralized economy which still relies heavily on oil and gas sales for revenues. The government has cut its budget, and started to trim the vast social welfare system and subsidies.
(Writing by Patrick Markey. Editing by Jane Merriman)