Algeria resumes trade with Spain as it wages trade war with France

Algeria has ordered the resumption of trade with Spain as it installs trade curbs with France in retaliation for Paris support for Morocco’s sovereignty over the Sahara territory.

The trade wars with European powerhouses reflects Algeria’s standing as the main adversary of Morocco on the Sahara issue, in which Algiers has used the Polisario proxies for years to unsettle the Kingdom in vain.

Aware that it will have shot itself in the feet by banning trade with France, Algeria ordered a return to trading with Spain to reduce the damage.

Economic war

Algeria has previously weaponized its gas exports and used the trade card to pressure Spain to abandon its position in support of Morocco’s autonomy plan for the Sahara to no avail. It is repeating the same tactic with France.

This week a document attributed to Algerian bank association was circulating on social media ordering a halt to trade with France. The document bears no heading, signature or stamp and Algerian authorities denied its content. Le Figaro confirmed the news.

Economists saw this as a reproduction of the same tactic with Spain when the government instigated the private sector- dominated by a business elite with a vested interest in the regime- to halt all trade with Spain.

France said it was unaware of such trade ban. But Reuters cited three diplomats confirming that Algeria was restricting trade with France, citing wheat as an example.

Repercussions

In 2023, the bulk of Algeria’s exports to France was gas, which only represents about 7% of the French energy mix. Meanwhile, most of French exports to Algeria are manufactured goods and foodstuff.

Algeria’s trade war with France could further undermine the Algerian economy which reported a surplus of some 2.5 billion euros in trade with France.

While France can easily replace Algerian gas, if need be, Algeria cannot find alternative markets to import fresh produce and manufactured goods without affecting prices domestically, where inflation is already double digit.

The Algerian decision to engage in a trade war with France shows once more the whimsical nature of the Algerian leadership, a military civilian duo that is willing to self-harm in the pursuit of a separatist chimera in southern Morocco.

By engaging in trade wars with France, Algeria is punching above its weight, while projecting an image of legal uncertainty to investors.