After Political Normalization with Spain, Algeria Begins an Economic Thaw

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The warming of relations between Algiers and Madrid reached a new important stage this week: the resumption of imports of poultry inputs, for which Algeria remains highly dependent.

In recent months, several signals have suggested that the relationship between Algiers and Madrid was being rebuilt.

The announcement, Tuesday, January 16, of a resumption of importation by Algeria of poultry inputs (chicks and eggs) “from the Kingdom of Spain” shows that the Algerian authorities are determined to play appeasement.

In a note that Middle East Eye was able to consult, the Algerian Professional Association of Banks and Financial Institutions (ABEF), dated January 14, thus confirms a resumption of economic cooperation, even limited, after almost two years of freezing between two major economic partners.

Some economic operators associate this sudden recovery with the “approach of Ramadan”, scheduled for March 9 or 10. “It is a month during which demand on the national market for meat and poultry increases significantly,” explains a player in the chicken sector to MEE.

Before the crisis, Madrid sent 500,000 chicks to Algeria each week by air freight. Since the suspension of trade, Algeria has turned to Turkey, less competitive than Spain, and the price of chicken has soared to the point that in November, Minister Abdelhafid Henni called an emergency meeting with all the players in this sector.

“The chicks are more expensive and above all, they are not vaccinated. While the chicks from Spain are all…”, underlines our source.

An Algerian employee linked to Spanish banks says he is convinced that “if imports with Spain resume for chicks, the authorities will also shortly restore licenses for meat imports”, always with the prospect of being able to meet demand during the holy month.

“The resumption of trade could go very quickly,” he explains, optimistically, to MEE. “Algerian and Spanish economic operators know each other well, some have their order books ready for the moment when all the lights turn green again. »

“From one day to the next, everything can stop”

Other economic players who have lost a lot of money in the crisis prefer to “wait to jump for joy”.

“Regaining profit levels before the quarrel will take time,” assures an Algerian business manager in construction, another of the sectors very affected by the cessation of imports.

“The Spanish know that from one day to the next, everything can stop. It won’t help them regain confidence in the Algerian market…”

Because it was from one day to the next that in March 2022, everything stopped.

The shot came from the Moroccan Royal Palace. A press release affirmed that Spain, through the voice of its Prime Minister Pedro Sánchez, supported the Moroccan autonomy initiative for Western Sahara, as “the most serious, realistic and credible basis for the resolution” of the dispute between Rabat and the separatists of the Polisario Front.

This about-face by Spanish diplomacy, which has always advocated neutrality between Rabat and the Polisario, had created a shock wave in Algeria, where the authorities are demanding a self-determination referendum for the Sahrawis.

Algiers had decided to recall Saïd Moussi, its ambassador in Madrid, and the sanctions fell one after the other.

All repatriations of irregular migrants (there were more than 11,000 in 2021) arriving on the Spanish coasts have been suspended, as have most air connections, although numerous, between Spain and Algeria.

The prices of gas exported to Spain were revised upwards, on the pretext that the prices charged were lower than those on international markets. Despite the crisis, Algeria remained Spain’s leading gas supplier.

In June, Algiers also “immediately” suspended the Treaty of Friendship, Good Neighborhood, and Cooperation concluded in 2022 with Madrid.

And the political staff got their money’s worth. The official press agency, APS, attacked the Minister of Foreign Affairs, José Manuel Albares, described as an “amateur minister”, saying “that he had broken into diplomacy”. “Also, history will not remember much about Albares, because nothing great is born from smallness,” we could read in June 2022.

A cost

The Algerian authorities then targeted Spanish Foreign Minister Pedro Sánchez and counted on his departure after the legislative elections in July. In March, President Tebboune told Al Jazeera that Algiers considered “Spain’s position vis-à-vis Western Sahara as an individual position of the Sánchez government.”

But it is ultimately he who will be re-elected as prime minister four months after the summer election, following a coalition agreement.

“From there, there weren’t really any options. Under pressure from economic operators, Algerians who own property in Spain but who could no longer go there, we were somewhat forced to let go of ballast,” summarizes a state executive on condition of anonymity.

The virtual breakdown of relations between Algiers and Madrid has had a cost.

The freeze in cooperation led to a drop of more than 80% in Spanish exports to Algeria. Nearly 130,000 Spanish companies have ceased to have commercial agreements with Algeria, according to data from ICEX España Exportacion e Inversiones (public commercial entity for the promotion of the economy and businesses).

While between June 2021 and March 2022, there were more than $1.6 billion worth of exports to Algeria, data from the Spanish Ministry of Industry, Commerce and Tourism shows that in September 2023, losses were around 99.7%.

To try to put an end to the commercial hemorrhage, Madrid had kept a low profile. Prime Minister Pedro Sánchez even threw a pole across the Mediterranean, saying he “would love to visit Algiers”.

But it was only after the legislative elections last summer that Algeria gradually re-established ties.

First, by rescheduling flights to Alicante, Madrid, and Palma and increasing services to Barcelona.

The sending of a new Algerian ambassador, Abdelfettah Daghmoum, to Madrid confirmed that normalization had begun.

According to information collected by MEE, since the festivities of November 1, the Spanish ambassador to Algeria has once again been invited to official Algerian ceremonies.

“I could never qualify Spain as an enemy country,” commented

the head of Algerian diplomacy Ahmed Attaf in an interview with the Al Jazeera channel in December, justifying Algiers’ change of attitude with Pedro’s speech. Sánchez at the United Nations General Assembly.

In September, the head of the Spanish government insisted at the UN on Madrid’s search for “a political solution mutually acceptable to both parties, within the framework of the United Nations Charter and Security Council resolutions”.

The APS concluded that he had “turned against the Makhzen [Moroccan Royal Palace]”, and the Moroccan media that nothing changed.