{"id":62584,"date":"2022-11-14T00:24:38","date_gmt":"2022-11-13T23:24:38","guid":{"rendered":"https:\/\/jazairhope.org\/?p=62584"},"modified":"2022-11-14T00:24:38","modified_gmt":"2022-11-13T23:24:38","slug":"why-washington-needs-a-friendlier-approach-to-this-major-gas-producer","status":"publish","type":"post","link":"https:\/\/jazairhope.org\/en\/why-washington-needs-a-friendlier-approach-to-this-major-gas-producer\/","title":{"rendered":"Why Washington Needs A Friendlier Approach To This Major Gas Producer"},"content":{"rendered":"
By\u00a0James Durso<\/a>\u00a0– Nov 12, 2022, 12:00 PM CST<\/span><\/p>\n <\/p>\n In September, a bipartisan group of U.S. Representatives\u00a0called on<\/a>\u00a0the U.S. Secretary of State to impose sanctions on the People’s Democratic Republic of Algeria (\u201cAlgeria\u201d), claiming that a\u00a0$7 billion arms deal<\/a>\u00a0with Russia violated the 2017\u00a0Countering America\u2019s Adversaries Through Sanctions Act<\/a>\u00a0(CAATSA). The group\u2019s action followed a\u00a0similar initiative<\/a>\u00a0by Senator Marco Rubio, also in September.\u00a0\u00a0Why Algeria, and why now?<\/span><\/p>\n Algeria is a former French colony and a major oil and natural gas producer that\u00a0exports 85%<\/a>\u00a0of its gas to Europe. The country charts an independent course, doesn\u2019t meddle in local affairs, and has close ties to Russia and China. Algeria is a harsh critic of Israel, opposed the U.S. invasion of Iraq in 2003 and 2011 NATO intervention in Libya, decried the Abraham Accords, which recognized neighboring Morocco\u2019s claim to the Western Sahara, and maintains relations with the Assad government in Syria.<\/span><\/p>\n Algeria fought two wars of independence: the\u00a01954-1962 war<\/a>\u00a0against the French colonizers, and the\u00a01991-2002 war<\/a>\u00a0against the Islamists, led by the\u00a0Armed Islamic Group<\/a>.\u00a0<\/span><\/p>\n According to the U.S.\u00a0Congressional Research Service<\/a>, \u201cAlgeria has the world\u2019s 11th – and 16th -largest proven reserves of natural gas and oil, respectively, and was the 10th-largest natural gas producer as of 2019. It is also estimated to have the world\u2019s 3rd -largest recoverable shale gas reserves.\u201d\u00a0<\/span><\/p>\n Algeria has the fourth-largest economy in Africa with a\u00a02021 GDP\u00a0of $167.98 billion. Oil and gas income\u00a0increased by 70%<\/a>\u00a0in the first half of 2022, and energy income is expected to total\u00a0$50 billion<\/a>\u00a0by the end of the year. The World Bank reported\u00a0Algeria\u2019s economy<\/a>\u00a0\u201cexpanded by 3.9% year-on-year during the first nine months of 2021, after contracting by 5.5% in 2020,\u201d largely due to increased European gas demand. Hydrocarbons account for 95 percent of export revenues and about 40 percent of government income.\u00a0<\/span><\/p>\n State-owned enterprises reportedly comprise over half the formal economy, and are a drag on growth, but the private sector is hoping the government\u00a0stays the course<\/a>\u00a0on reforms to attract foreign direct investment (FDI) to the non-energy sector, and doesn\u2019t backslide due to increasing hydrocarbon revenues. The government has an uphill climb as Algeria ranks\u00a0157 of 190<\/a>\u00a0in the most recent World Bank ease of doing business ranking, and it will be challenging to advance as it recovers from the pandemic\u00a0<\/span><\/p>\n The plan to\u00a0attract FDI<\/a>\u00a0to grow the non-energy sector is needed to cope with a\u00a0rising unemployment rate<\/a>, and a dangerously high\u00a0youth unemployment rate<\/a>\u00a0of almost 32%. The plan eliminates the \u201c51\/49\u201d requirement for majority Algerian ownership of new businesses, though it remains for \u201cstrategic sectors,\u201d that is energy, mining, defense, transportation infrastructure, and pharmaceuticals manufacturing<\/span><\/p>\n Key is the government not trying to \u201cbuy social peace\u201d via social security payments while oil and gas prices are high, as eventually prices will come down and angry youth without jobs may foreclose temporizing options for the government and force a new government, hopefully nonviolently.\u00a0<\/span><\/p>\n Algeria\u2019s relationship with the U.S. got off to a slow start in the 1960s but has generally been positive. In the 1950s, the Truman and Eisenhower administrations supported France in Algeria, but President Kennedy<\/span><\/p>\n Algeria mediated negotiations between the U.S. and Iran that resulted in the freeing of the 52 American hostages after 444 days in captivity. Algeria also offered support to the U.S. in the wake of 9\/11 and cooperated in counterterrorism operations, even offering the U.S. use of an airfield in the country \u2013 a major concession.<\/span><\/p>\n So, then, why the\u00a0agita<\/em><\/span><\/strong><\/p>\n America\u2019s \u201cYou are either with us, or with the terrorists\u201d mentality fails to take account of past cooperation and positive relations. Washington is apparently unable to believe a nation may prefer to look after its own interests first and sees any reluctance to place oneself in thrall to America as siding with the enemy\u00a0du jour<\/em>.<\/span><\/p>\n For example, the Pentagon\u00a0failed to recruit<\/a>\u00a0Vietnam as a military ally against China, forgetting, or choosing to ignore, that Vietnam\u2019s recent fights for liberation, first from France, then from America, might incline the country against military alliances, especially with the guys it defeated.\u00a0<\/span><\/p>\n More recently, the Minister for Foreign Affairs of Singapore, speaking on behalf of ASEAN about the U.S and China,\u00a0declared<\/a>, “We are not interested in dividing lines in Asia. Don’t make us choose. We will refuse to choose.” And even close friends of Washington are seeing the value of belonging to a forum independent of the Americans: the BRICS (Brazil-Russia-India-China-South Africa) group may soon\u00a0welcome<\/a>\u00a0Argentina and Iran which have applied to join, and Egypt, Saudi Arabia and NATO member Turkey have expressed interest. (Algeria has formally applied to join the bloc.)<\/span><\/p>\n One observer\u00a0noted<\/a>\u00a0that BRICS may become the \u201cworld’s commodity alliance\u201d with China as the manufacturing center and India as the service center.<\/span><\/p>\n So, who are the U.S. congressmen working for?<\/span><\/p>\n They may have a legitimate concern about the revenue Russia is getting from Algeria, though a $7 billion dollar arms deal pales next to the unlimited cash Washington is handing Kyiv. It could be they are promoting U.S. defense contractors to capture Algerian sales, though expecting Algiers to junk its entire Russian-supplied inventory is the same wishful thinking that decided that Vietnam would be a U.S. ally against neighboring China.\u00a0<\/span><\/p>\n Algeria\u2019s relations with Moscow go back to the 1950s when the Soviet Union provided assistance t0 Algeria in its war for independence, and, in 1960, the Soviets were the first to recognize the Provisional Government of the Algerian Republic.\u00a0<\/span><\/p>\n Algeria no doubt noted that the U.S. recently threatened to cut off Saudi Arabia, its biggest weapons customer, when it disagreed with its tactics in Yemen. And in 2013, Washington slowed down the delivery of helicopters to the Egyptian military government that ousted the Muslim Brotherhood government headed by Mohamed Morsi. So, they must be thinking in the El Mouradia Palace,\u00a0If this is how the Americans treat their friends\u2026<\/em><\/span><\/p>\n The U.S. politicians may think they are defending Israel, though Algeria\u2019s advocacy of the Palestinian cause isn\u2019t news in Jerusalem.\u00a0<\/span><\/p>\n At the recent Arab League summit, hosted by Algeria and the first since Israel normalized relations with several league members, Algeria\u00a0brokered a reconciliation<\/a><\/span><\/p>\n Hopefully, cooler heads will prevail and Washington won\u2019t alienate a country with which the\u00a0European Union seeks<\/a>\u00a0a \u201clong-term strategic partnership\u201d for natural gas and electricity. And France is seeking to repair relations via economic cooperation, though China is now Algeria\u2019s\u00a0biggest trade partner<\/a>. If Europe expects more energy from Algeria or elsewhere in Africa, though, it may have to stump up some cash to finance expansion of production, or participate in the 1,500-mile\u00a0Trans-Sahara Gas Pipeline<\/a>\u00a0that will send Nigerian gas to Europe via Algeria.\u00a0\u00a0<\/span><\/p>\n One country that will be investing in Algeria is China, and Europe may learn the meaning of \u201cpay to play.\u201d<\/span><\/p>\n Algeria will\u00a0coordinate<\/a>\u00a0its national development plans with China\u2019s Belt and Road Initiative, and the countries announced they had\u00a0signed<\/a>\u00a0the Five Year Plan for China Arab Comprehensive Strategic Cooperation (2022-2026). Accordingly, any energy investments by Beijing will be exclusively for China\u2019s benefit. China is now developing Algeria\u2019s\u00a0El Hamdania Central Port, Algeria\u2019s\u00a0largest and first deep-water\u00a0port\u00a0<\/em>and the second deep-water\u00a0port\u00a0<\/em>in Africa. China also helped complete the 750-mile\u00a0East-West Highway<\/a>\u00a0that connects Algeria with neighboring Morocco and Tunisia, and about 1,000 Chinese companies operate in Algeria, their way eased by the wavier of the \u201c51\/49\u201d requirement.<\/span><\/p>\n\n