Algeria turns Maghreb into world’s least integrated region

Trade continues to steeply decline between the two Maghreb heavyweights, Morocco and Algeria. Trade between the two nations dropped to just 130 million dollars last year, from 690 million dollars in 2021, which was also a small figure considering the potential of the two countries.

The very sparse trade- already reeling due to Algeria’s support for separatism in southern Morocco- was further undermined and limited only to products such as Algerian dates imported by Morocco.

Since Algeria cut ties with Morocco in August 2021, this political decision was followed by a series of economic warfare measures that later backfired at Algiers.

Few months later, Algeria halted gas supplies to a pipeline, threatened to cut gas exports to Spain after it backed Morocco’s autonomy plan for the Sahara.

As if the closed borders since 1994 was not enough, in early 2024, Algeria ordered its banks to not fund any import activity that involves transshipment through Moroccan ports.

Companies that do business with Morocco are punished. The recent trouble of Western Union in the country because its regional headquarters are in Morocco was the most recent example.

These one-sided measures worsened Algeria’s perception as an investment unfriendly country where political considerations easily spillover to hamper economic activity.

Many observers however see weaponizing the economy as a desperate measure by Algeria’s state-dominated economy to distract from its inability to compete in a free market.

In an alternative situation, Algeria’s oil and gas-dependent economy could have enhanced its competitiveness by opening up to nearby market, which would pay back on the medium term.

Instead, Algeria’s support for the Polisario separatists seems to have blinded the military rulers to take self-defeating measures that have little impact on the Moroccan economy.

Maghreb integration would remain a romantic dream pending realistic Algerian leaders who would break away with the zero-sum game to economic ties with Morocco in favor of a win-win relationship.

Until then, Morocco diversifies its trading partners, further widening the competitiveness gap with Algeria.