Monday, July 15, 2024

Algeria’s Trade Decline with Morocco: Unpacking the Implications for the Maghreb Region

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Algeria Turns Maghreb into World’s Least Integrated Region

In a clear demonstration of declining regional cooperation, trade between Morocco and Algeria, two major economies in the Maghreb, has seen a significant downturn. The trade volume has plummeted to a mere 130 million dollars in the last year from 690 million dollars in 2021. This decline is not just alarming in terms of numbers but also indicative of the untapped potential between the neighboring countries.

Already strained, the trade relations faced further setbacks due to Algeria’s support for separatism in southern Morocco, further limiting exchanges to a handful of products, such as Algerian dates, which are imported by Morocco. This decline in trade activities is a direct consequence of the political estrangement that intensified when Algeria severed ties with Morocco in August 2021. Following this, a series of economic aggressions were set into motion by Algiers, adversely affecting its own economic interests as well as those of the region.

Subsequently, Algeria took drastic measures including the cessation of gas supplies through a crucial pipeline and issuing threats to cut gas exports to Spain after it showed support for Morocco’s autonomy plan for the Sahara. Furthermore, since the borders had been closed since 1994, Algeria implemented a policy in early 2024 prohibiting its banks from financing any imports that involved transshipment through Moroccan ports. Companies engaging in business with Morocco faced punitive actions, a notable example being the challenges encountered by Western Union due to its regional headquarters being located in Morocco.

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These actions not only tainted Algeria’s reputation as a destination for investment but underscored the extent to which political decisions can obtrude economic development. Observers argue that such economic weaponization reflects the Algerian state-dominated economy’s struggle to thrive in a competitive free market environment. Rather than leveraging its oil and gas resources to bolster economic competitiveness through regional trade, Algeria’s political entanglements, especially its backing of the Polisario separatists, have led to counterproductive measures that scarcely impact the Moroccan economy.

The notion of Maghreb integration remains a distant dream amid the prevailing political ethos. Prospects for regional cooperation and economic development continue to be overshadowed by the adversarial stance adopted by Algeria’s military rulers. Their persistence in a zero-sum game severely hampers the potential for a mutually beneficial economic relationship with Morocco.

In the meantime, Morocco is progressively diversifying its trade relationships, further increasing its competitive advantage over Algeria. This strategic pivot not only enhances Morocco’s economic resilience but also underlines the importance of pragmatic diplomacy in fostering regional integration. As the Maghreb grapples with political divisions, the economic landscape of the region illustrates a poignant tale of missed opportunities and a pressing need for realistic leadership that prioritizes economic prosperity over political vendettas. Until such a paradigm shift occurs, the vision of an integrated Maghreb will remain an elusive aspiration, with its economies bearing the brunt of disconnected policies and unfulfilled potential.

Alexandra Bennett
Alexandra Bennetthttps://www.businessorbital.com/
Alexandra Bennett is a seasoned business journalist with over a decade of experience covering the global economy, finance, and corporate strategies. With a Bachelor's degree in Economics and a Master's in Business Journalism from Columbia University, Alexandra has built a reputation for her insightful analysis and ability to break down complex economic trends into understandable narratives. Prior to joining our team, she worked for major financial publications in New York and London. Alexandra specializes in mergers and acquisitions, market trends, and economic

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