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ARCHIVED - Algeria suspends trade relations with Spain, threatening gas supply
The crisis between Spain and Algeria could push energy costs up once more
Algeria has this week cancelled a two-decade long friendship treaty with Spain and suspended trade relations at a time when global energy costs are hanging in a precarious balance.
Tensions have been rising between the two nations since March when Spain backed Morocco’s plan to grant autonomy to Western Sahara, a Spanish colony until 1975, and the political dispute has boiled over with Algeria now pulling back from the 2002 treaty which has served to control immigration and human trafficking between the countries.
Although the Foreign Minister, Jose Manuel Albares, insists that the gas supply won’t be compromised and that the government is preparing a “calm but firm response” to the delicate situation, the fact remains that Spain imports 40% of its gas from Algeria. If this were to be cut off, it would present some very serious problems, and it’s no secret that Algeria is currently in talks with other European countries like Italy to supply to them.
Added to this is the fact that the Spanish company Naturgy is in the process of renegotiating its long-term gas contract with Algeria; all along, the government assured that any price increase would be “moderate” in line with current inflation, but if Algeria decides to hike up its prices it could spell disaster, especially since households and businesses have been promised their energy bills are about to take a nosedive.
Already, the Algerian banking association (Abef) announced that it will block all bank direct debits for foreign trade operations of products to and from Spain, a move that will affect all economic sectors.
It remains to be seen what long-term effects this break in the treaty will have but for now, the Spanish government at least has vowed to uphold the terms of its original agreement with Algeria, a nation which it still considers “friend”.
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