June 8, 2023

Six months after Algeria suspended the Treaty of Friendship with Spain, due to Madrid’s new position on the Sahara conflict, economic exchanges between the two countries are still paralyzed, much to the outrage of the affected companies.

With sales disrupted, investment frozen and projects halted, Julio Libero, head of Spain’s Ecomil, a specialist in public works equipment, confirms that since June “we cannot export or import, all operations are suspended.”

The company owns 40% of the Algerian group Europaktur and carries out almost all of its activities in Algeria. And that puts him in an awkward position, says Libero, who is “very concerned” that “it’s been six months and we haven’t received a single euro, and that’s not sustainable.”

Like Ecomil, dozens of Spanish companies were bankrupt because they couldn’t sell their products in Algeria. A situation that also affects some small and medium Algerian companies that depend on raw materials and spare parts “made in Spain”.

The case dates back to a sudden diplomatic shift in mid-March, when Spanish Prime Minister Pedro Sanchez announced support for Morocco’s proposed autonomy plan to settle the Sahara issue.

In response to this shift in Madrid’s traditionally neutral stance, Algeria suspended the 2002 Treaty of Friendship and Cooperation with Spain on June 8 before restricting trade with it and freezing banking operations.

The freeze, announced by Algeria’s “Professional Association of Banks and Financial Institutions”, has “seriously affected trade” between the two countries, as confirmed by Alfonso Tapia, CEO of Omnicria Consultoria, a consulting firm specializing in the Algerian market.

Faced with such blocking, some companies move their goods through third countries, but this option is only available to large companies due to its additional costs.

Spain bears mounting losses: according to the Ministry of Commerce, exports to Algeria peaked at 138 million euros between June and September, compared to 625 million in the same period in 2021, representing a deficit of 487 million euros in just four months.

The affected industries are numerous, from the food, chemical and textile industries to construction and others. Jamal Eddine Bouabdalla, head of the Algerian-Spanish Trade and Industry Club, confirms that “everything is on hold” in many sectors, pointing out that companies are being forced to close.

The only exception is gas, which in recent months continues to be delivered to Spain at a price raised some time ago by the Algerian Sonatrach.

How long will the alienation last? In June, the Spanish government called Algeria a “reliable partner” but has since become more reserved.

For affected companies, the situation is a source of frustration. “We asked the authorities for help, but received no response,” says a representative of the Spanish National Association of Raw Materials for Glass, Enamels and Porcelain Pigments.

This sector, which is heavily dependent on the Algerian market, lost more than 70 million euros due to the freezing of transactions. Many fear losing market share in the face of French and Italian competition.

Julio Libero criticizes the authorities, saying: “The government acts as if there is no problem, it has completely abandoned us.” The position is shared by the director of a Spanish small and medium-sized company, who asked not to be named, criticizing the “inaction” of Madrid and accusing Algeria of “contradictory” positions.

By the last phrase, the businessman means a statement published by the “Professional Association of Banks and Financial Institutions” in Algiers at the end of July, announcing the end of banking restrictions with Spain. But that announcement remained a dead letter, leaving the companies on their toes.

Jamal Eddin Bouabdallah confirms that “negotiations are currently taking place between the two governments and the situation cannot be left as it is.” beneficial to anyone. We must return to normal life.”

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