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Algeria: Anglo-america Calling
Oxford Business Group
February 24, 2006
Algiers, Algeria- More normally
associated with the Francophone world,
recent days have seen Algeria a most
favoured destination for representatives
of the Anglophone globe too, with the
British foreign secretary and the US
defence secretary both in town. The two
visits had one central issue in common -
security. Yet they also gave an
opportunity for some economic debate and
for some focusing on the growing nature
of US and UK trade involvement in
Algeria.
First to arrive in Algiers was US
Defence Secretary Donald Rumsfeld, who
gave five and a half hours of his
three-nation North Africa tour to the
Algerians. Meeting with President
Abdelaziz Bouteflika, he then told the
press that, We look forward to
strengthening our military-to-military
relationship and our cooperation in
counter-terrorism. Rumsfeld also said he
had discussed with Bouteflika a possible
US resumption of arms sales to Algeria,
though only in a minor way.
The Algerian president declined to
comment on this, yet this was not the
case with some of the Algerian press,
who gave a mixed reaction. The US is not
the most popular country amongst many
Algerians, who are opposed to its
involvement in Iraq and support for
Israel. Indeed, the independent
newspaper Le Quotidien d'Oran saw
Washington's focusing on military and
security issues as defining a role for
Algeria in global US strategy that many
would not be so willing to follow. The
Maghreb has apparently no political
purpose other than to serve as a
watchman, to wear a uniform or serve as
a vast communal protectorate in the face
of the risk of 'terrorist infiltration'
for Washington, the paper editorialised.
Nonetheless, US-Algerian relations have
been warming in recent years, and not
just because of common security
concerns. This point was quickly seized
on by the US-Algerian Business Council
(US-ABC), which on February 17 announced
that it has scheduled a series of events
for 2006 with the aim of boosting
awareness of business opportunities and
relations between the US and Algerian
business communities.
The council, which was set up in 2002,
comprises US companies present in
Algeria and some major Algerian outfits,
such as Air Algeria, Saidal and
Sonatrach. One major initiative that it
intends to follow up on is a visit to
Washington next month to discuss future
Algerian membership of the World Trade
Organisation (WTO). According to the
US-ABC manager, Ismail Chikhoun, an
Algerian energy delegation will also
visit the US in May to debate investment
opportunities and legislative and
administrative amendments that have
recently been made in the energy sector.
Indeed, energy is the main line of
business of US companies in Algeria.
According to US State Department data,
in 2005, direct investment by the US in
Algeria totalled $4.1bn, with most of
this in the petroleum sector. Algeria is
America's 10th-largest market in the
Middle East and North African region,
with US exports to Algeria reaching
$972m in 2004, a figure almost 50% up on
2003. Meanwhile, US imports from Algeria
grew from $4.7bn in 2002 to $7.4bn in
2004, with 99% of this total accounted
for by oil and liquefied natural gas
(LNG). US companies are also active in
the banking and finance, services,
pharmaceuticals, medical facilities,
telecommunications, aviation, seawater
desalination, energy production and IT.
In March 2004, US President George W
Bush designated Algeria a beneficiary
country under the Generalised System of
Preferences (GSP), a scheme for
duty-free treatment on certain products.
This came after a 2001 Trade and
Investment Framework Agreement, which
laid the groundwork for negotiations on
a bilateral investment treaty (BIT) and
a free-trade agreement (FTA).
Discussions on these are still
continuing. At the same time, the US
Export-Import Bank has an active
guarantee programme in Algeria with a
current exposure of around $1.8bn,
primarily for petroleum projects and
aircraft acquisition.
Algeria has also been brought into the
US-North African Economic Partnership (USNAEP),
which aims at supporting economic
restructuring ahead of future WTO
membership. This partnership was then
rolled over into the Middle East
Partnership Initiative (MEPI), which has
so far provided $3.5m to the Algerians.
The trend is therefore clearly towards
greater US involvement in trade with
Algeria, alongside political and
strategic convergence.
This is also the case with the UK, whose
foreign secretary, Jack Straw, flew into
Algiers a few days later. The British
minister also began his visit with a
speech stressing the need for security
co-operation. In particular, Straw was
looking to sign an extradition treaty
with Algeria which would enable the UK
to deport to Algeria people suspected of
terrorist activities and currently being
held in UK jails without trial. I had a
two-and-a-half-hour meeting with
President Bouteflika and I hope that
symbolises the emerging strength and
depth of relations between the United
Kingdom and Republic of Algeria, Straw
later told reporters.
As with the US, Britain's main economic
involvement in Algeria is in energy. In
fact, the UK is the number one foreign
investor these days, thanks to BP, which
has spent some $4bn recently on major
oil and gas projects in the country. A
delegation of senior British bankers
also visited back in January to explore
financial and business opportunities.
Important in these is an agreement on
investor protection, which Straw said
was currently being worked on.
This [agreement] will do a great deal to
enhance the confidence in the banking
and financial system, he told reporters
on February 17. Indeed, both the US and
UK seem to be warming to Algeria, and
willing to do yet more business with it.
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