In the shadow of diplomatic tensions between Algeria and France which are experiencing an unprecedented escalation, French business circles in Algeria are observing and following with great concern the evolution of the most serious crisis in the history of two countries.
This crisis, which broke out on July 31 following the decision of President Emmanuel Macron to recognize the Moroccan character of Western Sahara, worsened with the arrest and incarceration, in mid-November, of the Franco-Algerian writer Boualem Sansal. The escalation reached its climax this week, with the failed expulsion of an Algerian TikToker on Thursday January 9.
Expelled to Algeria, Doualemn was sent back on the same plane by the Algerian authorities, which angered Paris. In reaction, French ministers, notably that of the Interior Bruno Retailleau – who is curiously on the front line in the management of this crisis – threatened reprisals against Algeria.
Threat of reprisals against Algeria
Among the pressure levers cited are visas, immigration and trade between the two countries. This “ armed » was mentioned for the first time by Bruno Retailleau last October.
Since then, the idea has gained ground while Algeria should soon begin negotiations with the European Union on the revision of the association agreement.
This Sunday, January 12, the economic daily La Tribune affirms that “ the idea of a package of sanctions » against Algeria, « would be considered, but if it has not been validated ».
According to this newspaper, a meeting took place on Friday at the Élysée to study the retaliatory measures to be deployed against Algeria.
France brandishes commercial weapons against Algeria
« The commercial weapon can be a very useful tool. Let us hold the necessary discussions at the European level to, if necessary, increase customs tariffs with Algeria », Supported Friday the former Prime Minister, Gabriel Attal, boss of Emmanuel Macron’s party.
The word is out: France plans to use commercial weapons against Algeria to resolve the current crisis. A first in the history of bilateral relations.
In Algeria, France’s agitation of the threat of economic sanctions is greeted with a certain indifference, sometimes with a touch of defiance, particularly due to the enormous non-hydrocarbon trade deficit between the two countries.
The Algerians know it: France does not have the means to act alone on this issue. “ For the increase in customs duties, Paris must convince the other EU countries, which is far from being certain, otherwise it is easy to direct bilateral trade », confides an Algerian source.
« Such an eventuality must first of all make French companies based in Algeria and those that trade with our country tremble. », continues the president of an Algerian employers’ organization.
« In the event of a trade war, there will be losers on both sides. It’s clear. But in the current context, it is the French who will be the biggest losers », he adds on condition of anonymity due to the political sensitivity of the matter.
In addition to the unique human dimension that the two countries share, the economy represents an important part of the relationship between Algeria and France. Attacking economic ties will not be without consequences for businesses in both countries.
The episode of the suspension of trade with France for 48 hours last November showed the extent and density of this economic relationship.
« There are 6,000 French companies working with Algeria »
« There are 6,000 French companies working with Algeria and as many Algerian companies working with France for a business volume close to 12 billion euros. », summarizes Michel Bisac, the president of the Algerian-French Chamber of Commerce and Industry in a statement to TSA.
According to the latest OFATS (Foreign Affiliates Statistics) survey on the presence abroad of European groups, France comes first in Algeria with 201 subsidiaries of its companies present on Algerian territory.
In 2023, trade between the two countries reached 11.8 billion euros, up 5.3% compared to 2022, according to figures from French Customs. France bought mainly gas and oil from Algeria. Imports of non-hydrocarbon products are insignificant.
For its part, Algeria imported French industrial products (1.9 billion euros), mechanical equipment (one billion euros), transport equipment and agri-food products.
In value terms, Algeria imported 4.49 billion euros worth of goods from France in 2023 compared to 4.51 billion in 2022, a small decline of 0.5%, according to French Customs data.
To these figures, we must add the amount of dividends transferred annually by French companies present in Algeria.
In this context, in the event of an increase in customs duties on Algerian products to France, it will affect hydrocarbons (oil and gas) in a context marked by the increase in the price of gas in Europe, due to the cessation of deliveries of Russian gas via Ukraine. At the end of 2024, kilowatt-hour prices crossed the threshold of 50 euros for the first time since October 2023.
« Algeria is the second largest market in Africa for French companies. If France carries out its threats of commercial reprisals, it will hurt itself. The French authorities are more interested in calming things down. Algerian companies can find the products they import from France elsewhere, even if this will sometimes be difficult and expensive. But it will be more difficult for French companies, particularly SMEs, to replace orders lost with Algeria, especially since the global context, marked by the crisis, is not favorable », Develops the president of the Algerian employers’ organization.
« In the event of a trade war against Algeria, the French will be the losers »
If Algerian companies, particularly the largest, are not preparing for an immediate blow with France, they have already integrated this situation into their strategic plans.
The lessons of the 2022 crisis with Spain were learned when Algeria decided to abruptly suspend trade with that country. Algerian companies have suffered due to their dependence on Spanish suppliers.
The crisis with Spain which lasted until 2024 and the episode of the brief suspension of bank domiciliations with France last November reinforced the conviction within Algerian groups on the need to diversify their partners, and to look beyond France.
« At the strategic level, Algerian companies, particularly the largest, have taken measures to no longer depend on a single supplier. It is better to have two sources of supply than just one. There are other countries like Turkey or China which are ready to replace France, they are even on the lookout », adds our interlocutor.
Questioned, the boss of a large private Algerian group thinks that the economy must be spared from political tensions between the two countries.
« Algerian companies work with suppliers who meet purely economic needs: product quality, prices, after-sales service, etc. There are few feelings in this area. There are calls for tenders and consultations which are undertaken and the choices are made on a purely economic basis. Relations with French companies are historic and good. It won’t be easy to replace them overnight », he explains.
Foreign trade: Algeria’s formidable tools
In Algiers, in French business circles, the concern is palpable. “ Businesses on both sides are very worried », says Michel Bisac, who highlights the impact of the deterioration of political relations between the two countries on Algerian and French companies.
For him, economic leverage must be used to redress the state of relations between the two countries, and not to worsen the situation.
In fact, even if Algiers has not decreed any measures against French companies, the latter are finding it increasingly difficult to access the Algerian market, due to recurring political tensions and government restrictions on imports and the resumption of trade. control of foreign trade by the authorities.
« It is increasingly difficult to obtain import authorizations for products made in France. Certificates of conformity for food products have also become very difficult to obtain for French companies. », confides a French business leader. However, the restrictions do not specifically affect French products.
Algeria has decided to sharply reduce its imports. To do this, it has put in place effective tools that allow it to regulate imports in order to encourage national production and reduce the erosion of foreign exchange reserves, but also to choose trading partners.
If the European Union has insurmountable normative barriers for certain products coming from third countries, Algeria has put in place its system to control, guide and regulate its foreign trade.
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