Algeria’s trade bloc on Spain ‘could breach’ EU trade law

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Tensions are high between Spain and Algeria as the North African country announced the suspension of a 20-year-old friendship treaty following Madrid’s backing of Morocco’s Western Sahara autonomy plan , which was declared earlier this year.

Despite his statement, foreign policy chief Josep Borrell said the EU favors ‘dialogue’ first, in order to resolve differences [Getty]

Algeria’s decision to block trade with Spain following a diplomatic row over Western Sahara could violate European Union trade law, two senior EU officials said on Friday.

“The EU is ready to oppose any type of coercive measures applied against an EU Member State,” said EU foreign policy chief Josep Borrell and EU vice-president. European Commission, Valdis Dombrovskis, in a joint press release. “However, the EU continues to prioritize dialogue first to resolve controversies.”

Algeria on Wednesday announced the suspension of a 20-year-old friendship treaty with Spain and its banking association ordered a halt to payments to and from Spain, which Algerian sources say affects all trade except gas supply.

Algeria was angered when Spain said in March it supported a Moroccan plan to offer autonomy to Western Sahara. Algeria supports the Polisario Front movement which demands full independence for the territory, which Morocco considers its own and largely controls.

The EU’s intervention on the matter comes after Spanish Foreign Minister Jose Manuel Albares traveled to Brussels on Friday to discuss it with Dombrovskis.

“Spain has not taken a single decision that affects Algeria,” the minister said after the meeting. “We want a relationship based on friendship, dialogue, mutual respect and non-interference in internal affairs.”

Spanish companies have already started reporting disruptions to trade with Algeria, which receives around 1% of Spanish exports, including meat, metals and industrial chemicals, and is Spain’s second-largest supplier of gas.

Juan Ignacio Pero, president of PMS International, a Barcelona-based company that exports chemicals to Algeria and has water treatment projects in the country, said it has since detected Spain’s decision on the Western Sahara in March a slowdown in auctions on calls for tenders and management by customs.

He said shipping containers destined for the North African nation were piling up in Spanish ports and his Algerian staff were in limbo as there were no goods from Spain to deal with.

“What affects us enormously are the projects for which we are in the process of launching a tender in Algeria – we will lose these projects because of this situation,” he said.

The chief economist of the Central Bank of Spain, Angel Gavilan, told reporters on Friday that the diplomatic break with Algeria could have a significant impact on the Spanish economy and on inflation in the short term.

(Reuters)

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