We are reminded that Climate change would be no different from a double blow for oil-rich Mideast per experts by an AFP’s article dated 17 October 2021, and that it is closer than envisioned by most.
Climate change a double blow for oil-rich Mideast: experts
Paphos (Cyprus) (AFP)
The climate crisis threatens a double blow for the Middle East, experts say, by destroying its oil income as the world shifts to renewables and by raising temperatures to unliveable extremes.
Little has been done to address the challenge in a region long plagued by civil strife, war and refugee flows, even as global warming looks likely to accelerate these trends, a conference heard last week.
“Our region is classified as a global climate change hotspot,” Cyprus President Nicos Anastasiades told the International Conference on Climate Change in the Eastern Mediterranean and the Middle East.
Home to half a billion people, the already sun-baked region has been designated as especially vulnerable by the Intergovernmental Panel on Climate Change and the UN’s World Meteorological Organization.
Yet it is also home to several of the last countries that have not ratified the 2015 Paris Agreement — Iran, Iraq, Libya and Yemen — weeks before the UN’s COP26 climate conference starts in Glasgow.
A Lebanese army helicopter drops water on a forest fire in the Qubayyat area of northern Lebanon’s remote Akkar region during a heatwave on July 29, 2021, JOSEPH EID AFP/File
When it comes to climate change and the Middle East, “there are terrible problems,” said Jeffrey Sachs, who heads the UN Sustainable Development Solutions Network.
“First, this is the centre of world hydrocarbons, so a lot of the economies of this region depend on a fuel that is basically anachronistic, that we have to stop,” said Sachs of New York’s Columbia University.
“Second, obviously, this is a dry region getting drier, so everywhere one looks, there is water insecurity, water stress, dislocation of populations,” he told AFP.
Sachs argued that “there needs to be a massive transformation in the region. Yet this is a politically fraught region, a divided region, a region that has been beset by a lot of war and conflict, often related to oil.”
In this file photo taken on October 3, 2021 a man wades through a flooded street amid cyclone Shaheen in Oman’s capital Muscat Haitham AL-SHUKAIRI AFP/File
The good news, he said, is that there is “so much sunshine that the solution is staring the region in the face. They must just look up to the sky. The solar radiation provides the basis for the new clean, green economy.”
– Like ‘disaster movie’ –
Laurent Fabius, the former French foreign minister who oversaw the Paris Agreement, pointed out that in this year’s blistering summer, “we had catastrophic wildfires in Cyprus, Greece, Turkey, Israel, Lebanon”.
The greenhouse effect Gal ROMA AFP
“There were temperatures over 50 degrees Celsius (122 degrees Fahrenheit) in Kuwait, Oman, the UAE, Saudi Arabia, Iraq, Iran. We have drought in Turkey, water stress in different countries, particularly Jordan.
“These tragic events are not from a disaster movie, they are real and present.”
Cyprus, the EU member closest to the Middle East, is leading an international push involving 240 scientists to develop a 10-year regional action plan, to be presented at a summit a year from now.
The two-day conference last week heard some of the initial findings — including that the greenhouse gas emissions from the region have overtaken those of the European Union.
Already extremely water-scarce, the Middle East and North Africa (MENA) has been warming at twice the global average rate, at about 0.45 degrees Celsius per decade, since the 1980s, scientists say.
Flood damage in Yemen’s Mukalla in the southern Hadramawt province after Cyclone Shaheen hit the region and neighbouring Oman in October 2021 – AFP/File
Deserts are expanding and dust storms intensifying as the region’s rare mountain snow caps slowly diminish, impacting river systems that supply water to millions.
By the end of the century, on a business-as-usual emissions trajectory, temperatures could rise by six degrees Celsius — and by more during summertime in “super- or ultra-extreme heatwaves” — said Dutch atmospheric chemist Jos Lelieveld.
– ‘Future conflicts’ –
“It’s not just about averages, but about the extremes. It will be quite devastating,” Lelieveld of Germany’s Max Planck Institute for Chemistry told AFP.
In this file photo from July 3, 2021 a giant fire rages in the Troodos mountains of Cyprus, the worst blaze on record on the Mediterranean island Georgio PAPAPETROU AFP/File
Peak temperatures in cities, so-called ‘heat islands’ that are darker than surrounding deserts, could exceed 60 degrees Celsius, he said.
“In heat waves, people die, of heat strokes and heart attacks. It’s like with corona, the vulnerable people will be suffering — the elderly, younger people, pregnant women.”
Fabius, like other speakers, warned that as farmlands turn to dust and tensions rise over shrinking resources, climate change can be “the root of future conflicts and violence”.
The region is already often torn over freshwater from the Nile, Jordan, Euphrates and Tigris river systems that all sustained ancient civilisations but have faced pressure as human populations have massively expanded.
Sachs pointed to the much-debated theory that climate change was one of the drivers behind Syria’s civil war, because a 2006-2009 record drought sent more than a million farmers into cities, heightening social stress before the uprising of 2011.
Solar panels on rooftops in Binnish in Syria’s rebel-held northwestern province of Idlib, which has had no reliable state supply since Damascus pulled the plugin 2012 Omar HAJ KADOUR AFP/File
“We saw in Syria a decade ago how those dislocations of the massive drought spilt over, partially triggered and certainly exacerbated massive violence,” he said.
Some of the MENA region’s highest use of solar power is now seen in Syria’s last rebel-held area, the Idlib region, which has long been cut off from the state power grid and where photovoltaic panels have become ubiquitous.
In The Conversation of today, the debate is about How world leaders hope to reach net-zero emissions by 2050 – and why some experts are worried. Climate Fight podcast part 2.
How world leaders hope to reach net zero emissions by 2050 – and why some experts are worried. Climate Fight podcast part 2
In part two of Climate Fight: the world’s biggest negotiation, a series from The Anthill podcast on the UN climate summit in Glasgow, we’re talking to experts about the grand goal of the negotiations: reaching net-zero emissions.
More than 130 countries have set or are considering a target of net-zero emissions by mid-century. At COP26 – the annual meeting of the UN Framework Convention on Climate Change (UNFCCC), which the UK is hosting this year – world leaders will be urged to submit emission reduction targets for 2030 that will put them on track to reach net-zero by 2050.
And what does net zero mean, exactly? “All it really means is that our dangerous interference with the Earth’s climate will stop when we stop emitting greenhouse gases into the atmosphere,” says James Dyke, a senior lecturer in global systems at the University of Exeter. With time and the world’s remaining carbon budget running perilously short, net-zero emissions entails not only “the amount of carbon that we will emit”, Dyke explains, but also “the amount of carbon that we will remove.”
Carbon capture and storage is one technology that climate scientists hope could help in that effort. Our producer, Tiffany Cassidy, visited the Boundary Dam coal-fired power plant in Saskatchewan, Canada, to see it in action. This is the first power station in the world to successfully use this technology, and we learn that it now captures two thirds of its carbon emissions.
“It’s not going to be just one technology that is going to help us to reach net zero,” says Mercedes Maroto-Valer, director of the Research Centre for Carbon Solutions at Heriot-Watt University. “It’s going to be a portfolio of different technologies that are going to be ready at different times.”
There are options for removing carbon from the atmosphere, such as planting trees or direct air-capture machines; and preventing it getting there in the first place, such as carbon capture and storage; and replacing fossil fuels with zero-carbon alternatives, such as green hydrogen – but none of them are ready to be deployed at anything like the scale necessary to offset the more than 40 billion tonnes of CO₂ which countries emit each year.
As the awesome challenge of decarbonising the world bears down on us, Myles Allen, professor of geosystem science at the University of Oxford, tells us that there is no longer room for half-measures:
We didn’t save the ozone layer by putting a tax on deodorant. We went to the manufacturers of CFCs and just said, no, you can’t produce these things that are going to destroy the ozone layer. We’ve got to do the same thing for fossil fuel producers.
Join us, and a host of academic experts, as we stake out the path to net zero.
The Climate Fight podcast series is produced by Tiffany Cassidy. Sound design by Eloise Stevens and the theme tune is by Neeta Sarl. The series editor is Gemma Ware.
Climate Fight: the world’s biggest negotiation is a podcast series supported by UK Research and Innovation, the UK’s largest public funder of research and innovation.
The authors of this article on Climate change and elaborate on how to avert it through experts’ notable advice of a ditch of 90% of the world’s coal and 60% of oil and gas to limit warming to 1.5°C. Would it be feasible if some of the MENA countries economic life sustenance depends on fossil fuels related revenues? Here is what these authors are saying.
Climate change: ditch 90% of world’s coal and 60% of oil and gas to limit warming to 1.5°C – experts
Global mean surface temperatures reached 1.2°C above the pre-industrial average in 2020, and the Intergovernmental Panel on Climate Change warned in its recent report that Earth could hit 1.5°C in as little as a decade. The 0.3°C separating these two temperatures make a world of difference. Scientists believe that stabilising our warming world’s temperature at 1.5°C could help avoid the most serious effects of climate change.
Fossil fuels such as coal, oil and natural gas are the source of just over 80% of the world’s energy. Burning them accounts for 89% of human-derived CO₂ emissions. To avert catastrophic warming, the global community must rapidly reduce how much of these fuels it extracts and burns. Our new paper, published in Nature, revealed just how tight the world’s remaining carbon budget is likely to be.
In order to hold global warming at 1.5°C, we found that nearly 60% of global oil and fossil gas reserves will need to remain in the ground in 2050. Almost all of the world’s coal – 90% – will need to be spared from factory and power plant furnaces. Our analysis also showed that global oil and gas production must peak immediately and fall by 3% each year until mid-century.
Even meeting these stringent limits may not be enough on its own to stabilise global warming at 1.5°C, however.
That’s because we based our estimates on a carbon budget compatible with just a 50% probability of limiting warming to 1.5°C. Our model simply could not be pushed to a greater chance of achieving the 1.5C target because it was already at its limit, given our projections of fossil fuel demand in the near future.
Our analysis also relies on the large-scale deployment of technologies capable of removing CO₂ from the atmosphere sometime in the future. By 2050, our scenario expects around four gigatonnes a year will be being captured by so-called negative emission technologies. There remains a lot of doubt about whether it is even possible to sufficiently scale these technologies up in time.
So, to aim for a better chance of achieving the Paris Agreement’s goal and to lower the risk of relying on as yet unproven technologies, we argue that our estimates of how much of the world’s fossil fuels cannot safely be extracted should be treated as cautious underestimates. The world may need to be even more ambitious.
Fossil fuel rationing
We estimated how much fossil fuel production in each region must fall and how fast based on a global energy system model. We allocated the remaining shares of fossil fuel production allowed within the budget based on the costs and carbon intensity of producing different oil and gas assets, and how cheap low and zero-carbon technologies are in different parts of the world.
Our analysis showed that total fossil fuel production is limited by a global carbon budget. Production growing in one region of the world will require a decrease in another to keep the global trajectory pointing downwards. A mechanism such as the Global Fossil Fuel Registry – a public database of all known reserves – could provide the necessary transparency for an international effort, with the cooperation of governments and fossil fuel producers.
The US and Russia sit on half of the world’s coal but must leave 97% of it in the ground. Australia, which recently pledged to keep producing and exporting coal beyond 2030, would need to keep 95% of its reserves underground. Oil-producing states in the Middle East must not extract around two-thirds of their reserves, while most of Canada’s tar sand oil must not be burned, along with all of the fossil fuel buried beneath the Arctic.
Our analysis suggests that many countries will need to move out of fossil fuel production relatively quickly, which raises concerns about how the transition can be managed fairly. Countries such as Iraq and Angola have a high dependency on fossil fuels for government revenues. They will need support to diversify their economies in a managed way – including financial and technological assistance to develop new low-carbon industries – and to decarbonise domestically to reduce their own reliance on fossil fuels.
The necessary energy transformation highlighted in this research will require a range of policy levers, including measures that drive down fossil fuel consumption, such as banning petrol cars or promoting renewable electricity generation, and those targeting production itself, including restrictions on new fossil fuel extraction licenses.
Alliances between countries are also likely to be important to build political support for reducing fossil fuel production. The Beyond Oil and Gas Alliance, formed by Denmark and Costa Rica, has pressured other countries to halt investment in new oil and gas projects.
Phasing out global fossil fuel production at the rate suggested in our study is possible, but it will rely on some of the measures we’ve described expanding and gaining the support of large producing countries and companies – those which have benefited most from the fossil fuel era.
For over a century, burning fossil fuels has helped propel our vehicles, power our businesses, keep the lights on, and warm our homes and to this day still provide many of our energy needs. We are paying the price in terms of extreme weather fluctuations and the increased intensity of natural disasters. The latter’s impact, coupled with advancements in technological knowledge and implementation on the hydrocarbons market in parallel to a specific social movement of divesting off all fossil fuel industries, could not have begun if no palliative industry can procure all that necessary energy. At this conjecture, a story of a looming oil price super cycle will likely be the last produced in the IMF blog titled ‘End of the Line‘ only manages to highlight a change in the game. Here it is.
A looming oil price super cycle will likely be the last
By:
Rabah Arezki, chief economist at the African Development Bank and a senior fellow at Harvard University’s Kennedy School of Government.
Per Magnus Nysveen, senior partner and head of analysis at Rystad Energy.
After a pandemic and a price war sent petroleum prices tumbling in 2020, they are again on the rise. A new oil price super cycle—an extended period during which prices exceed their long-term trend—seems to be in the making, driven by pervasive supply shortages from the lack of investment that has continued since the 2014 collapse in oil prices and, more recently, reduced investment in shale oil production; and demand growth triggered by a strong recovery in countries such as China, a big stimulus package in United States, and global optimism about vaccines.
Some of these factors have persistent components and will likely more than offset any downward pressure on consumption that becomes part of a new normal post–COVID-19 environment.
Nevertheless, this could be the last super cycle for oil because major economies appear committed to replacing fossil fuels, and mass car manufacturers have responded by committing to replacing internal combustion engine vehicles with electric vehicles over the medium term. This shift will transform the oil market into one consistent with climate goals, but poses a risk of disorderly adjustment for economies dependent on oil, with far-reaching effects that in some cases could spill over their borders.
Oil investment crunch
Even with relatively lower oil prices, extraction and exploration companies have been highly profitable. At the same time, perhaps in recognition of a less buoyant future, they have reduced their investment. Production in oil fields and the number of wells are declining, and reserve depletion is rapid. The drop in both capital expenditure and replacement of oil reserves has persisted since 2014.
COVID-19 has exacerbated the investment decline. For example, shale oil output—which has a shorter production cycle and therefore is more sensitive to changes in investment—is now increasing by half a million barrels a year, compared with 2 million barrels a year before the onset of the pandemic. While the Biden administration’s announced ban on drilling on federal land in the United States will have little direct impact on shale production, it signals a shift in federal government sentiment against the oil industry.
Shale producers have adopted a noticeably more cautious investment posture. As a result, they will be operating with positive cash flows—cash flow was previously directed toward investment spending. This reduced investment will lessen the role of shale as swing production and plants the seeds of a price super cycle. On the other hand, the Organization of the Petroleum Exporting Countries will likely increase production to counter that upward pressure on price.
The debate over peak demand
Several commentators and major oil market players, including BP and Shell, argue that global demand for oil peaked in 2019 at about 100 million barrels a day and that it will never again reach that level because of pandemic-related structural changes. That view seems supported by the sharp reduction in oil consumption for transportation, including jet fuel. After travelers started cancelling flying plans in March 2020, jet fuel consumption collapsed and only began to creep up as travel restrictions started to ease.
Those who believe consumption has peaked still anticipate that gasoline consumption will rise in mid-2021, despite higher prices as a result of the inevitable lag between any demand-induced increase in crude oil production and the increase in refined products to meet demand. With vaccine developments and optimism from a proximate reopening of the global economy, it is expected that oil consumption will continue to recover, but to a level lower than what prevailed before the pandemic—effectively the peak of oil consumption.
Yet proponents of the view that oil demand has peaked overlook the structural increase in consumption that will eventually offset any downward shift from COVID-19. Rising living standards and a growing middle class in China and India will lead to increased demand for individual cars and air travel. So even if economic growth slows, the large numbers of people crossing the income threshold that enables them to afford a car will support demand for travel. In emerging markets such as China and India, any shift toward electric vehicles will likely be slower than in advanced economies given concerns over the availability of charging stations. The rate of adoption of electric vehicles will, by and large, be the major driver of future oil demand because road fuel accounts for half of global oil demand.
The structural increase in oil demand, together with a persistent reduction in production from insufficient investment, will likely precipitate—and keep alive for some time—an oil price super cycle. But will an increase in oil prices prompt more investment and lead to another price bust as has happened in the past?
Technology and its consequences
Technological innovation may make things different this time. Large investments will likely be discouraged by the new technology at the heart of carmaker plans to replace internal combustion engine vehicles with those that run on electricity. The stock market capitalization of electric carmaker Tesla points to the imminence of the transformation of the automobile market. Tesla’s capitalization dwarfs that of traditional carmakers—even though those manufacturers produce vastly more cars than Tesla. That disparity has prompted traditional car manufacturers to commit to replacing vehicles powered by internal combustion engines with those powered by electricity, which in turn has triggered massive research and development on electric vehicles by manufacturers seeking to grab shares of the new market (see table).
A frenetic ramping up of production of electric vehicles is not without risk, however. It could cause supply to exceed demand—which would lead to negative cash flows, illiquidity, and bankruptcies of car manufacturers. The automakers’ bet is driven both by the commitment of governments to achieving zero net carbon emissions and by the belief that consumers will want to adopt cleaner modes of consumption—transportation accounts for about a quarter of global energy-related carbon dioxide emissions. But it is unclear whether consumers will merely pay lip service to cleaner consumption or actually change their behavior. Will higher carbon prices become less important to consumers than concern about an inadequate charging infrastructure for automobile batteries?
That said, mass manufacturing will eventually make the price of electric cars attractive, and a spike in oil prices would hasten the conversion to electric vehicles. This last oil price super cycle will be consistent with climate goals and associated with commitments by large economies to net zero carbon emissions in the medium term. However felicitous a development that will be for the global climate, however, it poses a risk that the oil reserves so many oil-dependent economies count on will be less valuable—especially for reserves where extraction costs are high. The reserves and the investment surrounding them become, in effect, stranded assets. That could lead to severe economic woes, including bankruptcies and crises, in turn leading to mass migrations, especially from populous oil-dependent economies, many of them in Africa. Other larger oil-dependent economies in the Middle East, central Asia, and Latin America are also an important source of remittances, employment, and external demand for goods and services that benefit many neighboring countries. The end of oil, then, could not only devastate oil-dependent economies but could also overwhelm their neighbors. It is not all bad news for countries with mineral deposits important to the energy transition. Cobalt, essential for car batteries, will be in much higher demand. Uranium could be valuable as well as electricity generation moves away from fossil fuels and nuclear power becomes more attractive.
The end of oil thus makes economic transformation imperative. Oil-rich countries must diversify to become resilient to the changes in energy markets. An appropriate governance framework to manage proceeds from oil in good and bad times has always been important to fostering economic diversification. But with stranded assets a new risk, radical shifts in governance in oil-dependent economies are urgent. Dubai, for example, facing the depletion of its oil reserves, transformed itself into a global trade hub. Countries and businesses reliant on these markets must formulate policies to address this transformation, including the development of renewable energy. To jettison their hidebound economies, which have led to low productivity and waste, oil-rich economies should commit to reforms that lessen obstacles to innovation and entrepreneurship. Reforming corporate governance and legal systems, promoting markets that have no barriers to entry and exit, and ending favoritism for both state-owned enterprises and politically connected private firms will help attract investment and change attitudes toward innovation (Arezki 2020).
What impact does the EU/Algeria Association Agreement applicable on 1 September 2020 will have on the Algerian economy? For that, see HKTDC review; the image above is only for illustration.
Signed on September 1, 2005, the Free Trade Association Agreement with Europe, which also applies to Morocco and Tunisia in the Maghreb, is due to come into force on September 1, 2020, after a three-year delay at Algeria’s request. Having numerous implications for the whole of Algerian society, and therefore having to be considered in the socio-economic recovery plan, the Association Agreement with the EU provides for gradual tariff dismantling. It has an impact on any business creation. At the recently chaired Council of Ministers, the President of the Republic gave guidance to reassess the economic and trade aspects of the Agreement, which has failed to achieve the expected European investment targets.
The Association Agreement, based on several objectives, has strategic implications for the future of the Algerian economy. The principles of the Association Agreement are essentially similar to those found in the WTO. This world’s member countries account for more than 95% of world trade, and the majority of OPEC and non-OPEC countries with much higher production levels than Algeria, including Saudi Arabia and Russia are members of that organisation.
We have nine (9) impacts of this Agreement:
The prohibition of the use of “price duality” for natural resources, particularly oil (domestic prices lower than export prices);
The revision of rule 49/51% in any investment project, with Europe welcoming the recent decision to relax this rule, awaiting the implementing decree for clarification of what is strategic and what is not.
The general elimination of quantitative restrictions on trade (import and export);
The obligation to put in place quality standards to protect the health of both humans and animals (health and plant health rules);
All commercial state monopolies are gradually adjusted for a period of negotiation.
The urgent need to integrate the dominant informal sphere (50% of economic activity, 33% of the money supply in circulation).
Economic cooperation will have to take into account the essential component of preserving the environment and ecological balances.
concerning the impact on energy services, if these agreements can have little effect on the upstream hydrocarbon market, the same cannot be said about all downstream hydrocarbon products. That must be subject anyway to European and international competition and the opening up of the energy services market to competition.
The EU acknowledges that between 2005 and 2019 Algerian imports from Europe are about $320 billion and that Algerian non-hydrocarbon exports were only about $15 billion. But according to the EU, for any objective analysis, oil and gas imports must be included, (over 400 billion dollars between 2005/2019) which would give a balanced overall trade balance, that apart from the hydrocarbons, Algeria can export to Europe. If Algeria has not benefited from the Association Agreement, it is because structural reforms under an internal decision in Algeria have not been carried out. Europe being a regulatory institution, cannot force firms to invest in each country, the latter being attracted by the profit function of the business environment that Algeria must improve. For Algeria, it is Europe that has not fulfilled its commitments with a growing imbalance of its non-hydrocarbon trade balance committed to fostering a diversified economy and that Algeria has always advocated for the strengthening of dialogue and “dialogue” between Algeria and Algeria. European Union (EU) with a view to “densifying” bilateral relations in the mutual interest and balance of parts to face the common security and development challenges in a win-win partnership, not wanting to be seen as a mere market. To the concerns raised by the EU regarding its market share in Algeria as a result of the measures taken by the Algerian government in a very particular context, the balance of payments deficit, provided for by the Agreement would not be unique to Algeria as evidenced long before the coronavirus epidemic. For its part, according to the European Commission, there will be no question of revising the Framework Agreement, that applies to all countries that have signed the Agreement. Algeria should not be an exception, but not it is not only economic adjustments that would revive cooperation between Algeria and the EU to give this Agreement its full importance. Europe is not against a revision of the Agreement. Still, it wants the creation of a stable and transparent legal framework, conducive to investment, as well as the reduction of subsidies, the modernisation of the financial sector, and the development of the potential of public-private partnerships which are part of the necessary structural reforms that still need to be carried out. For Europe, geostrategically, Algeria is a crucial player in regional stability and energy supply. According to the EU executive in its report on the progress of EU-Algeria relations dated May 03, 2018, and in Reports between 2019 and 2020, the European Union welcomes Algeria’s security and defence efforts in the region.
So, what prospects to prepare Algeria for new global challenges? In August 2020, the analysis of the socio-economic situation highlights that the rent of hydrocarbons where oil/gas with derivatives accounts for 98% of the country’s foreign exchange inflows (noble products not exceeding $600 million in 2019). the unemployment rate, and the level of foreign exchange reserves that keep the dinar’s rating at more than 70% (our interviews Monde.fr/AFP Paris 10/08/2020 and France24/AFP on Accord 23/08/2020). It is that Europe remains a key partner for Algeria, as evidenced by Algeria’s foreign trade structure for 2019. For the main suppliers, Algeria’s top five suppliers account for 50.33% of total imports, China being the main supplier (with a large trade imbalance against Algeria between 2010/2019 ) contributed 18.25% of Algeria’s imports, followed by France, Italy, Spain and Germany with shares of 10.20%, 8.13%, 6.99% and 6.76%. For the main customers, during the year 2019, Algeria’s top five customers account for almost 50.85% of Algerian exports, with France being Algeria’s main customer with a 14.11% share, followed by Italy, Spain, Great Britain and Turkey with shares of 12.90%, 11.15%, 6.42% and 6.27%. In terms of the distribution of Algeria’s trade (import and export) by geographical area during the year 2019, the bulk of trade remains focused on traditional partners. The volume of trade with America, Africa and Oceania fell by 18.42% in 2019, compared with 2018 from $17.10 billion to $13.95 billion and Africa, contrary to some speeches, did not exceed $2.8 billion, and certainly down for 2020. European countries accounted for a 58.14% share of the total value of trade in 2019, amounting to USD 45.21 billion compared to USD 51.96 billion in 2018. Asian countries are the second largest trade flows with a share of 23.92%, from USD 19.07 billion to more than US$18.60 billion for the periods under review. So what are the prospects for Algeria to prepare for new global challenges (decentralisation, digital and energy transition)?
The future of the Algerian economy is based on seven strategic parameters (our interview website Maghreb Voices 18/10/2020):
improve the business climate, where bureaucratic power discourages real investors, with greater coherence of institutions, around five to six main regional poles. A total decentralisation for the essential blockage in Algeria is the central and local bureaucracy that paralyses any creative initiative;
the urgent reform of the socio-educational system, from primary to secondary and higher education, including vocational training, the pillar knowledge of the 21st century, land;
the control of public expenditure, costs and the fight against overcharging and corruption;
in the medium and long term, non-hydrocarbon growth must be part of the fourth global economic revolution based on the digital and energy transition;
controlling demographic pressure and urbanisation for a balanced and supportive space;
the reform requires the transparency of Sonatrach instead of production of the year explaining the audit demanded by the President of the Republic., for a turnover of 50 billion dollars, better management of 20% saves 10 billion e dollars per year;
the urgency is the reform of the financial system and the overhaul of the financial system and in its fundamental component. Indeed, a rentier oligarchy used the customs system for overcharging for lack of a table of value linked to the international network, (price, cost/quality weight); the un-digitised state system favouring the squandering of land; the un-digitised tax system promoting tax evasion, the public banking system with huge loans granted without real guarantees, in addition to interest rate increases, without correlation with the impacts on wealth creation.
In summary, it should be realistic to avoid reasoning in terms of a nation-state because only internationally competitive public or private enterprises can export, with the regulatory state playing as a facilitator, with market segments controlled by large firms by large geographical spaces. I think that despite these cyclical differences, it is a matter as I pointed out a few years ago at a conference, at the invitation of the European Parliament in Brussels, to de-outsiderdom with relations because of the stability of the two shores of the Mediterranean and Africa. It requires us to undertake together (see our study IFR French Institute of International Relations Paris 2011 the Europe Maghreb cooperation in the face of geostrategic issues).
Our partners well received the President’s last speech on the desire for openness to the productive domestic and international private sector. The entrepreneur and direct operator state must gradually be erased to make way for a government exercising public power in its natural missions of arbitration and regulation. I am convinced that through productive dialogue relations between Algeria and Europe will find a solution guaranteeing mutual interests, which does not exist in the practice of sentiment business, the aim is to foster a win-win partnership. Algeria can establish a diversified economy and become a pivotal country and factor of stability of the Mediterranean and African region. In short, to project itself in the future, new governance is necessary.
University professor, international expert Dr Abderrahmane MEBTOUL, ademmebtoul@gmail.com
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