Algeria’s Economic Cooperation with Russia with all economic exchanges at less than $1 billion in 2015 . . . 

The recent visit of Algeria’s Prime Minister followed the meeting of the 8th session of the Algero-Russian commission on economic, trade, scientific and technical cooperation, held in July 2015.  This had been sanctioned by the signing of an MoU statement reinforcing the bilateral relations of the two countries.  It had notably enabled the signing of other bilateral agreements in order to achieve the Declaration of Strategic Partnership adopted in 2001 in Moscow.  Algeria’s Economic Cooperation with Russia is presently the object of intense scrutiny by the local academics and media alike.

Herewith is that of  Dr. Abderrahmane Mebtoul, University Professor, Expert International, ademmebtoul@gmail.com . . .

This cooperation, between Algeria and Russia, is reviewed and it is immediately felt that the historical relations between the two countries are to date and by far merely declarations of intent.

Indeed, trade between Algeria and Russia, excluding armament, reached $530 million in 2014.  The pendulum is clearly in disfavour of Algeria, especially when we know that 523 out of the $530 million represent products imported by Algeria from Russian suppliers.  The remaining $7 million represents the small value of Algerian exports that include $3 million in food products.

What is the reality of this cooperation ?

For purposes of our brief contribution, only existing practical cases not feelings were the underlying facts that were taken into consideration.

We are therefore witnessing a slow development of the volume of bilateral trade that as a matter of fact reached $885 million in 2015, although it was $175 million in 2002.

Would all commercial transactions between Algeria and Russia as per the Central Bank of Algeria be carried out in Rubbles to boost trade?  Even though Algeria’s main partners happen to be (suppliers and customers) mainly Western countries and China.

Trade with the EU surplus though going down in 2015 with current streams decreasing by 27% from 2014, the EU remains the largest trading partner of Algeria with a 36.1% reduction, from $40.4 billion to $25.8 billion (i.e. 68.3% of the total of Algerian exports, against 64.2% in 2014).

Algerian imports from the EU decreased by 14.6%, from $29.7 billion to $25.3 billion (or 49.2% of total imports of Algeria).  The deficit relates also to Asia which being in 2015 the second partner of Algeria, with trade amounting to $14.4 billion (-18.6% YOY).  According to official statistics, these cover 23.0% of imports whilst absorbing only 6.8% of exports, with a trade deficit with this region de $9.3 billion, an increase of 22.6% compared to 2014, when the deficit was only $7.6 billion, because of the imbalance in its relations especially with the imbalance in Algeria against China even more important with the EU requiring a rebalancing economic interests to prevail over political feelings.

Meanwhile, the five algero-russian cooperation agreements that have lately been signed in Moscow on April 27, 2016 appear not to change the above detailed trends.  These agreements are basically, according to the Algerian Press Service (APS) a Memorandum of Understanding (MoU) in the areas of housing, cultural cooperation for 2016 to 2018, a cooperation agreement between the APS and Rossiya Segodnya, a MoU between the Algerian Atomic Energy Commission (COMENA) and its counterpart, the Russian State corporation (ROSATOM), and finally a MoU between the National Agency for the Promotion and Development of Technology Parks (NPTAC) and the Skolkovo.

But both Algeria’s and Russia’s economies appear to be in practical terms not necessarily cooperating rentiers (hydrocarbons oil semi-annuity based economies) but definitely competing (for instance isn’t the Russian giant GAZPROM directly competing with SONATRACH vis-a-vis of the European gas supply market).

Despite that however, and despite a long-standing relationship, the two nations seem to have trouble seeing eye to eye.  There seems to exist some kind of strategic energy related interests in common with a view to stabilize prices.  On the other hand, military imports from Russia being important, presumably to allow the Russians to balance the trade equilibrium and so as to contribute to Algeria setting a military industry in the context of import substitution.  The Russian Foreign Minister during a visit he has recently made to Algiers said that the two countries already had a bilateral commission on military cooperation on armaments (Moscow being the primary caregiver in arms of Algiers).  In January 2015, according to the Russian press, Algeria had ordered from Russia, 12 Sukhoi SU-34 tactical bombers in order to rejuvenate the Algerian fleet.

This command was part of a signed arms contract in 2006 with a value of $7.6 billion for the supply of missile systems, aircraft equipment and maritime and terrestrial defence technologies.  But the most important aspect of this visit concerns the delicate international political and economic juncture, marked by outbreaks of geostrategic conflict that could dangerously mortgage peace in the world.  The threat of transnational terrorism and organized crime constitute a full identity of views and a convergence between Algeria and Russia.  Thus, Russia has supported the Algerian initiatives to resolve the crises in Libya and Mali and, generally in the Sahel region.   The two countries are also in agreement with that the rules of any international crisis should be based on the norms and standards of international law, the Charter of the United Nations and respect for the sovereignty and territorial integrity of all States.international law, the Charter of the United Nations and respect for the sovereignty and territorial integrity of every state.

Situation of the Russian economy

On 22 August 2012, Russia joined the WTO after 18 years of negotiations.  With a view to accession, Russia concluded 39 bilateral agreements on access to the services market and 57 agreements on access to the goods market.  In March 2014, Russia joining the OECD process was frozen in a context of geopolitical tensions.  The in the meantime, the Russian authorities do recognize the need to modernize the economy, to restructure sectors displaying some technology lag and to review the mode of finance of companies.  As Algeria, Russia remains a Keri economy which is largely based on the extraction and export of hydrocarbon oil.

Algero Russian MoU

Advertisements