BY: Hana Saada
ALGIERS- The diplomatic crisis that erupted between Spain and Algeria in June of last year has had far-reaching consequences beyond the energy sector. The conflict, which has been ongoing for a year, was sparked by the Spanish government’s unexpected reversal of its position on the Western Sahara issue in support of Morocco’s plan for the occupied territory.
In response, Algeria took several measures against Spain, including recalling its ambassador in Madrid and suspending the Treaty of Friendship, Cooperation, and Good Neighbor signed between the two countries in 2002. Additionally, Algeria froze bank domiciliations for foreign trade operations of products and services to and from Spain.
This last measure has had a significant impact on Spanish companies that rely on the Algerian market. As a result of the crisis, Spanish companies trading with Algeria have suffered losses amounting to millions of euros.
During his visit to Algeria last March, the High Representative of the European Union for Foreign Affairs and Security Policy, Vice President of the European Commission Josep Borrell, addressed the “obstacles” introduced by Algeria since June 2022 to commercial exchanges with Spain, stating that a solution must be found.
Prior to the crisis, Algerian-Spanish relations had experienced a “golden age” since 2013, according to Spanish media outlet ABC. The restrictions on banking operations for foreign trade between Algeria and Spain, imposed by the Algerian government last June, have had a direct impact on exports.
According to the Secretary of State for Commerce in Spain, the year 2022 saw a significant decline in exports due to the restrictive measures imposed by Algeria. This decline was observed across all sectors, with a sharp acceleration from June onward, resulting in a 93% drop in exports by December. The total value of exports for that month was a mere 10.8 million euros, compared to the monthly average of 169 million euros recorded between January and May of the same year. Meanwhile, imports increased by 59% over the course of the year, largely due to rising energy prices.
Data from ICEX Spain, a public body in Spain, reveals that a staggering 129,475 Spanish companies have ceased commercial relations with Algeria. In 2022, the number of exporters dropped to 189,573, down from 222,603 in the previous year. Additionally, 8,934 regular Spanish exporters ceased operations in Algeria in 2021. As a result, the bilateral trade deficit has increased significantly, reaching 6,575 million euros.
The loss of market share in Algeria has benefited other countries, as Spanish companies have been forced to withdraw from the market. The ICEX directory of Spanish companies operating in Algeria highlights the sectors that were most affected by the decline in commercial operations between the two countries. These include integrated energy engineering services, aeronautical services, tourism-related services, the installation, maintenance, and distribution of oil and gas, and steel products. Other sectors that were impacted include building construction and public works services, financial services, telecommunications, legal advice, machinery and equipment for the oil industry, hydraulic infrastructure, trains, ceramics, perfumery, soft drinks, and real estate development.
More recently, the latest data from the Spanish Ministry of Tourism, Industry, and Trade shows that from June 2022, when Algeria imposed trade sanctions on Spain, to March 2023, Madrid exported a paltry $213 million worth of goods.
This compares to more than $1.6 billion worth of goods exported to Algeria between June 2021 and March 2022.
In March, Spain’s export of goods amounted to a mere $14 million, prompting the Ministry to engage in discussions with the European Union to establish a mechanism to provide aid to the most affected Spanish companies. However, despite efforts to find a solution, the situation remains unresolved.
According to Marin Orriols, the International Area Director from the Barcelona Chamber of Commerce, various approaches have been attempted, including discussions with the Chambers of Commerce of Algeria and Spain. Unfortunately, these efforts have been met with refusal, as Algeria insists that Spain accept the UN resolution regarding Western Sahara.
This political issue has had a significant impact on the economies of numerous Spanish companies, leaving them to fend for themselves while other EU countries take advantage of the situation. Orriols expressed his disappointment with the European Union’s lack of action to protect Spain against Algeria’s decision, with Italy and France capitalizing on the opportunity to cover the exports that would have otherwise gone from Spain to Algeria.
In a written question to the government of Pedro Sanchez: A Catalan MP reveals huge losses for Spanish companies!
In a written inquiry to the government of Pedro Sanchez, a Catalan MP has brought to light the staggering losses incurred by Spanish companies. The losses, which exceed 2 billion euros, were a result of business dealings with Algeria. The situation is further compounded by the fact that the Algerian market, which holds great promise for Spanish companies, has been lost due to the betrayal of the Saharawi by the Spanish government.
This revelation is supported by an exclusive document obtained by the La Patrie News website, which outlines a written question posed to the Spanish government by the parliamentary group Junts per Catalunya. The question, which demands a written response from the Moncloa, the seat of the Madrid government, leaves little room for ambiguity. Plier Chauz Gomez, deputy of the Junks Per Catalunya, has not minced words in his inquiry.
The document highlights the suspension of the treaty of friendship and good neighborliness by Algeria on June 8, followed by the freezing of accounts intended for banking transactions. Despite an intervention by the European Commission, Algeria declared that the rupture of the bilateral agreement with Spain would not affect those it maintains with the EU. As a result, Italy has emerged as Algeria’s new privileged partner in the extension of gas export agreements to the EU.
The inquiry is laced with a touch of resentment and jealousy, and for good reason. Nearly a year after the suspension, Spain has lost 95% of its exports to Algeria. The situation is dire, and the consequences for Spanish companies are grave. It remains to be seen how the Spanish government will respond to this inquiry, but one thing is certain: the losses incurred by Spanish companies are staggering, and the future prospects for the Algerian market are bleak.
The situation is dire. Entrepreneurs are facing losses of nearly 2 billion euros, with concerns arising over pre-ordered stocks that were never delivered. The issue is compounded by the fact that Spain will miss out on lucrative contracts in the near future. Some business owners have been forced to relocate their production tools, resulting in additional expenses and the diversion of future profits to other EU member countries such as Italy, France, and Portugal. The legal sanctions imposed by Algeria on Spain serve as a severe warning to other EU member states that may be susceptible to the blackmail and corruption of the Moroccan Makhzen.
Industry, Commerce, and Tourism Minister Hector Gomez has assured the Senate that he is working to resolve the problem. However, the only viable solution is for Spain to fully assume its legal and historical responsibility as the administering power of Western Sahara, thereby relaunching the UN process of decolonization of the region. The Spanish Parliament must also consider various forms of direct and indirect aid to Spanish companies on the brink of ruin due to the ill-considered decision of Pedro Sanchez, who fell victim to heinous blackmail by the people of Makhzen, as previously reported.
The flourishing and promising trade in the Algerian economy has become a matter of survival for many companies and European states, particularly in light of the armed conflict in Ukraine. It is imperative that Spain return to international legality and take responsibility for its role in Western Sahara to avoid further economic devastation.
